BI-METALLISM.

HC Deb 18 April 1890 vol 343 cc815-912

*(4.15.) MR. SAMUEL SMITH (Flintshire)

In moving the Resolution of which I have given notice, I ask the indulgence of the House while I try to lay before it, as succinctly as I can, a very intricate and, at the same, a very important question. The subject was discussed last year briefly and inadequately, and I raise it now in order that we may have a more exhaustive debate and that I may take the sense of the House upon it. To show the keen interest felt in it, I may say that no fewer than 140 Petitions had been presented to the House in favour of my proposal from many of the most important industial centres of the Kingdom, from chambers of commerce and chambers of agriculture, from working men's societies, and various industrial interests, and the signatures attached amount to no fewer than 60,000. For the sake of clearness I will divide the subject into three heads —first, the advantage of the old bimetallic system of Europe; secondly, the evils which arose from its rupture; and thirdly, the practicability and desirability of re-establishing it. The custom of mankind since the origin of civilisation has been to use gold and silver alike as standard money tied together by a ratio fixed by law. This ratio did not vary much from 10 or 11 of silver to 1 of gold, or as 11 to 1 under the Greek and Roman Empires, and during the Middle Ages down to the discovery of America, it remained very steady. For nearly 2,000 years silver was the money of the world. Then, owing to the enormous supplies of silver from the mines of Potosi, it gradually altered in the course of a century to 15 to 1, at which it continued with little alteration for 200 years prior to 1873. So steady was the ratio that the Royal Commission on the Currency, which reported two years ago, unanimously stated (page 2)— From the middle of the 17th century the relative value of the two metals did not vary much more than 3 per cent in either direction until the recent divergence began to manifest itself in 1873. We have frequently had, in a single year, since 1873, greater variations between gold and silver than in the whole 200 years before that date, and it must be obvious that a totally new influence has come into play. Let me point out the distinction that existed between the bimetallism that prevailed before this century, and that which came into force in France from 1803 to 1873. The old bi-metallism of Europe was a very rude and unscientific system. There was no unity of action among the nations; each adopted and changed its ratio at will; one nation had 15 to 1; another, like England in the last century, had 15.21 to 1, as fixed by Sir Isaac Newton in 1717; others had 14f to 1, and so on. Silver was the principal money, and gold was rated to it; besides there was no open Mints, with unlimited coinage of either metal, which is the absolute condition of effective bi-metallism. The various countries coined a certain amount of either metal as suited them, and each metal naturally gravitated to the centres where it was most highly valued. No doubt many and great inconveniences resulted from this form of bi-metallism, yet it gave the world the inestimable advantage of keeping both metals in circulation at very nearly a fixed par of exchange. The second period of bimetallism was the French system from 1803 to 1873, which was far more scientific, and far more successful in binding the two metals together. The ratio adopted was 15½ to 1, and so successful was that system in preventing fluctuations, that the extreme variation in the London Market between the metals in 70 years was from 1521 to 15.90, and these variations are easily accounted for by the fact that England became a gold using country by the Act of 1816, and when silver was wanted for export to India it had to be imported from France at a considerable cost of transit, insurance and other exchange charges. These charges fully explain the slight fluctuations in the London market. There must also be borne in mind the extraordinary strain to which the French system was put during these 70 years. In the early part of that period the yield of gold was extremely small, say £2,000,000 a year against £6,000,000, of silver. England resumed specie payments in 1821, and so drained the Continent of gold, and there were times when a small premium on gold was charged in France for export, very seldom going as high as 1 per cent, or 2 per cent. Then came the gold discoveries of California and Australia, which raised the yield of gold to £30,000,000 annually against £8,000,000 of silver, and in 20 years doubled the gold supply of the world, yet the ratio remained unchanged. The French system acted as an equalising machine, and the vast supply of gold was diffused through the world without disturbing the relative values of the metals. In 1865 a combination of States joined France, and formed what is called the Latin Union, under similar conditions of coinage. Can anyone doubt that the French system saved Europe from a violent dislocation of gold and silver at the time of the Californian and Australian gold discoveries. If gold had then been demonetised to the extent that silver has recently been demonetised, we should have seen just as heavy a fall in gold measured by silver as we have recently seen in silver measured by gold. The ratio would have gone to 10 to 1 in place of remaining at 15½ to 1. We should have seen gold debts lightened and silver debts enhanced, just as we have recently seen gold debts enhanced and silver debts lightened. Can anyone doubt that the maintainance of the French system was an enormous gain to the cause of justice and fair play, as well as to international commerce. This country reaped all the advantages of bi-metallism, though mono-metallic itself; it had only to send its gold to Paris and get silver; or send silver and get gold, and so it could carry on its trade with India and China and South America as safely as if they all had identical money. We had virtually a par of exchange all the world over, to the enormous advantage of this country, the chief trader with the silver-using countries. I know that the great objection brought against our plan is that we attempt to do what is impossible. It is alleged that we are trying to tie together by law two commodities which constantly vary both in extent and cost of production. We arc constantly told that the law can no more fix the ratio between gold and silver than between coal and iron, or between wheat and barley. I reply that the experience of the French system proves that the thing can be done in spite of the greatest fluctuations in supply ever known in the history of the world. And the reason is this: Monetary Law constitutes the chief demand for the precious metals. The tastes or desires of individual consumers constitute the demand for other commodities, but the Mint is the chief demand for either gold or silver. If the leading nations close their Mints against gold, it goes down relatively to silver; if they close their Mints against silver it goes down relatively to gold; if they keep open large bi-metallic Mints, with unlimited coinage of both metals at a fixed ratio, they virtually fix that ratio for the whole world. The finding of the Royal Commission on this head is clear and unanimous. They say:— Now 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 ho 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 in force 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. That is the finding of the Commission, presided over by Lord Herschell, and signed by my right hon. Friend the Member for the University of London (Sir J. Lubbock). I cannot imagine how any fair-minded person who has studied the evidence can come to any other conclusion. Nothing more clearly illustrates the inveterate prejudice of the banking and financial class on this subject than their refusal to admit for many years that the French system had anything to do with the stability between gold and silver prior to 1873, I freely grant that there are some things which the law cannot do; it cannot fix the value of the precious metals as compared with other commodities. That depends upon many things, one of which is the supply of the precious metals. In the Middle Ages so scarce was that supply that a quarter of wheat sometimes sold at five shillings, and labourers' wages were two shillings per week. Then the discovery of the South American mines took place in the 16th century, and a great flood of the precious metals went through Europe, and prices rose fourfold. Again, after the gold discoveries in California and Australia, when once more a great flood of the precious metals flowed over Europe, prices rose 40 per cent., and I would especially call the attention of the hon. Member for Leeds to this fact, and also to the fact that this occurred simultaneously with a great reduction in the cost of production, owing to such modern inventions as railways, steam boats, and telegraphs. According to all ordinary laws, prices ought to have fallen, but instead of that they steadily rose, with occasional fluctuations, until, in 1873, they were 40 per cent, higher than they were in 1848. Then, I would ask attention to this fact. There followed a strain on gold and the demonetisation of silver, and prices kept falling for 15 years until they got below the point at which they stood in 1848. Articles have been written in the magazines to prove that the whole fall in prices is due to the fact of the discovery of economising expedients—better machinery. I would ask the House why prices steadily rose for 25 years to the extent of 40 per cent., whilst the modern economising systems of production were in operation — how came it that the values governed by gold and silver rose under these economising processes? The House must feel the force of this query. All that the law can do is to give monetary power to gold alone, or to silver alone, or tie both together under a bi-motallic system. Now, let me ask the House to look at the advantages of the old bi-metallic system. We are the great traders with the silver-using countries, which contain a population of nine hundred millions of people. They are our best customers, because they have light duties and few manufactures of their own; they need capital to develop them, we have it to spare; they are constant borrowers in the London market, and so long as gold and silver were tied together they could safely borrow, with interest payable in gold, because they always knew that a certain amount of silver would exchange against a fixed amount of gold. India borrowed largely under this system, and a vast amount of private capital was invested in all these countries, and no inconvenience was caused until the bimetallic system was abandoned in 1873. I may mention that the exports from the United Kingdom ran up, under that system, from £63,000,000 in 1849 to £255,000,000 in 1873, from which they fell back to £212,000,000 in 1886, and last year recovered to £248,000,000. We had no trouble with the finances of India up to that date, whereas the House knows well that since that time we have bad endless deficits and the greatest difficulties. I think I have proved my first point, that the old bi-metallic system worked well for the whole world, but especially for England, the great trader with the silver-using countries. Now let me deal with the second point, namely, the evils that arose from the rupture of the bi-metallic system. It is not necessary to remind the House of the intolerable depression of trade that set in about 1874, when the Mints of France and the Latin Union were practically closed to the coinage of silver. This depression lasted, almost without interruption, till 1887. It was accompanied by an enormous fall of prices, say 30 to 40 per cent., bringing up to the lowest level known in this century; and it produced immense suffering in nearly all our industrial centres, and among the agricultural population. Wages and profits alike fell greatly. Vast numbers of workmen were thrown out of employment—estimated at one time to reach 700,000 men. Our social system was more severely strained than at any time since 1848. The Commission on the Depression of Trade collected a vast mass of evidence on the subject, and recommended that a Special Commission should investigate the monetary aspect of the question, believing that that had much to do with it. The result was that the Commission on the Currency was appointed, which has produced a most valuable Report, and which is largely confirmatory of our opinions. Now, I wish to call the attention of the House to the singular fact that the fall of prices and the fall of silver proceeded almost pari passu; and the years of the heaviest depression of silver were the years of the heaviest depression in trade. There can be no doubt that these two phenomena were closely connected. Silver fell, as measured by gold, 30 per cent, to the lowest point, and commodities to about 35 per cent.; but all silver-using countries escaped this depression. Prices in them remained unchanged, and commerce went on as before. When the trade of our country was dwindling in value, year by year, that of India was increasing by leaps and bounds. All other gold-using countries suffered similarly; in all there was intense depression, great social discontent, much increase of Socialism, a falling Revenue, and an increase of protection. I wish especially to call attention to this fact, as some persons try to stigmatise our course as secretly favouring Protection. I assert that the great fall in prices in gold-using countries, caused by the demonetisation of silver, enormously increased the sentiment in favour of Protection, and caused a great increase in Import Duties in France, Germany, Russia and Italy, of late years. The policy of the Bi-metallic Party undoubtedly makes for Free Trade. And now I would allude to another point. I would ask attention to a matter I dealt with last year when we debated this subject—and I repeat myself because I see hon. Members present who were not here during the former debate. I may be permitted to touch again on the matter to which I refer, because it lies almost at the root of our contention. I say that the demonetisation of silver was a commercial injustice to the debtor class in all gold-using countries. The creditor class were favoured by the appreciation of gold and the depreciation of silver. Is the House aware of the heavy burden under which the trade of this country is carried on? I do not think many people are aware of it, but I have taken pains for years past to ascertain what the charges upon our trade and commerce really are, and I put it that the trade of this country is carried on under a vast burden of fixed charges, payable in gold, amounting certainly to not less than £150,000,000 a year, and probably as much as £200,000,000 a year. These include national and local debts, mortgages, ground rents, mining royalties, railway debentures and preference shares, long leases, annuities, pensions, &c. The purchasing power of gold, even after the recent revival of trade, is about 40 per cent, greater than it was in 1873, that is to say, 40 per cent, more of the products of human industry have to be sold to raise the money needful to meet these charges. This is a tax levied by the drones on the working bees of society, and surely it cannot be for the well-being of society to add to the incomes of the idle non producing class, at the cost of the toiling masses. I hold that one-half of this extra burden is the result of the demonetisation of silver. There are about equal amounts of gold and silver in circulation; had these metals continued to be tied together by the Bi-metallic Law of 15½ to 1, the fall of prices would have been equally diffused over both gold and silver using countries, and the fall of prices in gold-using countries would have been just half of what it has been. The creditor class, the wealthy bondholders, money lenders, mortgagees, &c, would have lost one-half of their unearned increment, which would have remained in the pockets of the working industrial class, who constitute 90 per cent, of the nation. This one-half cannot be put at less than £30,000,000 a year. In fact, there is much reason to suspect that there was a kind of conspiracy among the financial class in Europe and America to get altogether rid of silver, as full valued money, in order to increase the value of gold, in which their Revenues were paid. There arose, simultaneously, a cry for the demonetisation of silver in Germany, France, the United States, and England, from 1870 to 1878. It was advocated by the newspapers in the interest of the financial class. Their aim was to bring about a universal gold standard; they calculated on the ignorance of the masses about all monetary questions, and very nearly succeeded, for a time, in what I could only call a nefarious plot. In America they succeeded, by a kind of trick, in demonetising silver for a short time; but the American people were too shrewd to be long hood-winked; they insisted on silver being re-monetised, and they have wisely coined and put into circulation, in the shape of silver certificates, about £70,000,000, and so greatly relieved the strain on gold, the ratio being 16 to 1. Within the past few days a Bill has passed the Committee of both Houses of the Legislature enormously increasing the coinage of silver, and requiring the Government to coin, not $2,000,000 monthly, but $4,500,000, with the result of causing a, great rise in the price of silver. The American people thoroughly understand that the contracting of the money supply of the country makes only in the interest of the fixed investment classes. Our object is to make our people understand the subject as well as the Americans—and when they do so, we shall find that whatever the House may arrive at as to our proposed to-day it will then respond heartily to the proposition we make. I believe that, it is largely owing to the efforts of the Bi-metallic Party that the tendency to demonetise silver has been checked, and a gigantic fraud against civilisation has not been fully consummated. The agitation which we have carried on has made the masses understand that their interest lies in a full circulation of money, not in a contracted one. It has made them understand that the contraction of the currency makes only, as I say, for the interest of the fixed investment class, and is opposed to the well-being of the whole nation. I claim in support of my views the great authority of the Currency Commission. They put in the clearest light the immensely increased strain put on gold at the time when silver was demonetised; they point out that just at that time the new requirements for the United States, Germany, Italy, and other countries to fill up their circulation with gold caused a demand for £200,000,000 sterling. At that time the whole production of gold in the world was only £20,000,000 a year, of which one-half was used up in the arts: that is to say, only £10,000,000 was available annually for purposes of coinage, and to meet this sudden demand for £200,000,000. This was the moment chosen to demonetise silver, just when there was a great scarcity of gold. Need we wonder that gold was appreciated in value, just as silver was depreciated? Its supply obeyed the laws of all commodities; as the supply fell off and the demand increased it rose in value, but the increased demand was largely the product of unjust and unwise legislation, which excluded silver from the joint work it had hitherto discharged along with gold, and artificially raised one metal and lowered the other. The operation of this principle is clearly explained by Professor Thorold Rogers, in these words:— It will be clear that just as a very great fall would take place in the value of existing stocks of gold were this metal absolutely demonetised, so e converso a considerable rise would occur in its comparative value if in the economical history of any community, or rather of a large number of communities, gold were increasingly adopted as a measure of value and a means for carrying on commerce. All the best economists maintain the advantage to mankind of a full supply of money, and the evil of its artificial contraction. The historian, Hume, writes— We find that in every kingdom into which money begins to flow in greater abundance than formerly everything takes a new face. Labour and industry gain life, the merchant becomes more enterprising, the manufacturer more diligent and skilful, and even the farmer follows his plough with greater alacrity and attention. McCulloch wrote— Though like a fall of rain after a long course of dry weather an increase of the precious metals may be prejudicial to certain classes, it is beneficial to an incomparably greater number, including all who are actively engaged in industrial pursuits, and is, speaking generally, of great public and national advantage. Chevalier says— Such a change will benefit those who live by current labour. It will injure those who live upon the fruits of past labour, whether their fathers' or their own; in this it will work in the same direction with most of the developments which are brought about by the great law of civilisation, to which we give the noble name of 'progress.' Jevons strongly maintains the same view, and Allison, in a remarkable passage, points out how the resurrection of mankind from the sleep of the Middle Ages was largely owing to the increased supply of money from South America, which greatly diminished the weight of debts and taxes, and gave hope and buoyancy to mankind. Exactly the same effect was produced by the gold discoveries of California and Australia, which gave Europe 25 years of extraordinary prosperity. I should like to add that no one has written more ably on the subject of the appreciation of our gold standard and the injury that it does to the debtor class, than Mr. Giffen, who has lately shown such unaccountable hostility to our movement. I have only time to glance at two other great evils which have arisen from the demonetisation of silver. The first of these is the disturbance of the finances of India. As all the House knows, the Indian Government collects its revenues in silver, but has to pay about £15,000,000 sterling annually in gold in London for fixed charges. It is obvious that just as silver falls more and more must be parted with to meet these charges. It is clearly set forth in the Report of the Royal Commission. They show that every fall of 1d. in exchange imposes an extra burden of say 10,000,000 rupees on India, increasing as the exchange falls. Now, as the exchange has fallen in India from 1s. l1d. to 1s. 5d. per rupee since 1872, the extra burden to India is nearly 60,000,000 rupees, say of upwards of £4,000,000 at present rate of exchange. There is dispute about some minor points, but all the Indian financial authorities declare that the Revenue has suffered by several millions sterling, and the greatest confusion has been caused to Indian finance. The have had innumerable deficits since 1873, and have had to suspend the Famine Insurance Fund for several years, and add to the cruel and oppressive Salt Tax, which is now about 15 times the prime cost of the article. There is, it seems a surplus on this year's Budget, partly caused by the rise of exchange. It is said that the people of India gain just as their Government loses. I allow that there is some truth in this. Its trade is stimulated by the same cause that injured ours for so long. Its cotton manufacture has, no doubt, been galvanised by the low exchange which has hurt Manchester so much. But, on the other hand, a great impediment is put in the way of borrowing in England for railways and other re-productive works; and, when this and the increased taxation is taken into account, it is very doubtful whether India on the whole is a gainer. It must also be remembered that a great part of the savings of India, for hundreds of years, is invested in silver. India holds at least £200,000,000 sterling in coined silver, and, perhaps, as much in the shape of ornaments; and this vast mass has fallen nearly 30 per cent., as compared with the gold money of Europe. Were silver universally demonetised it would fall very much more; and were India to adopt a gold standard, as some have proposed, it would be almost confiscated. I am sure that, in the long run, a bi-metallic system would conduce to the benefit of India; and all that I have said of India holds equally true of China and other silver-using countries. I can only glance at the last great evil which has sprung from the disuse of the bi-metallic system, namely, the injury inflicted on the cotton trade of Lancashire. This industry is the greatest but one in the country. It gives a maintenance, directly and in- directly, to two millions of people, and has suffered more than any industry in England during the past 15 years, except, perhaps, the wheat growing districts. It is not experiencing the revival of trade which has visited most other industries; its progress has almost ceased, while that of our great competitors is proceeding by leaps and bounds. Will the House allow mo to give some figures from Mr. Thomas Ellison's Annual Circular, which is the best authority on all questions of cotton statistics? In the 18 years from 1871 to 1889 the consumption of cotton increased in Great Britain, 25 per cent.; Continent of Europe, 107 per cent.; United States, 141 per cent.; India, 901 per cent.; in other words, it increased in India from 87,000 bales to 871,000 bales. One result of that increase has been almost to transfer a vast trade in yarn with China and Japan from Lancashire to Bombay. I can put this before the House in a single sentence. In 1874 we exported to China and Japan nine times as much yarn as was sent from India; now India sends three times as much as we do, and will apparently extinguish our trade in the course of time. Now, I assert that one chief cause of this gigantic increase of trade, is the virtual bounty given to India by the constant fall of silver and exchange. Whatever other advantages India possesses, Lancashire can easily cope with; but this bounty handicaps her hopelessly in the race. I do not intend to go into this complicated subject, as I shall be followed by a gentleman who thoroughly comprehends it in all its bearings. I will simply say that the manufacturing population thoroughly understand it; they know it is a matter of life and death to them; and they will make their influence felt in this House, either now or at the next General Election, in a way that will surprise some politicians. I will now ask the House, to turn with me to the last division of the subject, namely, the practicability and desirability of re-establishing the bi-metallic system international!-. Let me remind the House that two Conferences have been held in Paris for this purpose; the first in 1878, and the second in 1881. These Conferences were called at the joint invitation of France and the United States, and the object was to try if an international agreement could be come to for the restoration of the bi-metallic system. Germany was not represented at the First Conference, but was represented at the second one, which, practically, embraced all the principal nations of the world. It is not too much to assert that the refusal of England to alter her system was the main reason of the failure of these Conferences. There is every reason to believe that if England had agreed, then the United States, Prance, and Germany would have concurred, and probably nearly all the States of Europe. The great evils arising from the demonetisation of silver were admitted by all, and by none more than the English Delegates, of whom the present Chancellor of the Exchequer was one, in 1878. He said— A campaign against silver would be extremely dangerous, even for countries with a gold standard. Though England had a gold standard she had great interest in the maintenance of silver as currency. One or two States might demonetise silver without serious results; but if all demonetised there would be no buyers, and silver would fall in alarming proportions. Thus all, or nearly all, States were interested in silver. If all States should resolve on the adoption of a gold standard the question arose, Would there be sufficient gold for the purpose without a tremendous crisis? The subject is far better understood now than it was then; it would be easier now to get a general agreement. Germany has very much altered her views, and it is believed to be now ready to join if England will be a party to International action. All turns upon the policy of this country; we can prolong the era of confusion, or we can close it. I ask, which is the nobler r¢le to play? Now, let me deal as briefly as possible with the main objections against our scheme. In the first place, the weightiest objection is the supposed impossibility of fixing by law a permanent ratio between two articles which constantly vary in the rate and cost of production. No one has laboured as much as Mr. Giffen, and, I allow, with great ability. Mr. Giffen's great object has been to show that the French ratio did not secure fixity. I think I have proved that it did so practically in spite of the extraordinary strain to which it was subjected, first, by the small gold supply early in the century; secondly, by the inundation of gold after 1850; and thirdly, by the fact that France stood alone between England, a gold-using country, and Ger- many, a silver-using country, and thus was first drained of one metal and then of the other. If England, Germany, and the United States had been parties to the bi-metallic system of France, these slight variations would not have occurred. The judgment of the Currency Commission was practically unanimous on this point. Even the six members who were not in favour of this country becoming bi-metallic came to the following conclusion:— (Sec. 107.)"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 staple ratio might be maintained if the nations we have alluded to (the United Kingdom, Germany, the United States, and the Latin Union) 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. I am aware that two Members (Sir John Lubbock and Mr. Birch) put in a mild caveat against this view; but even if we exclude them, 10 out of 12 Members fully adopted this conclusion, supported by the great name of their Chairman, Lord Herschell. One right hon. Gentleman, the Member for Derby (Sir William Harcourt), while admitting the efficiency of the French ratio, feels difficulty in believing in International bi-metallism, on the ground of the great fall of silver in the sixteenth century, namely, from 11 to 1, to 15 to 1 of gold. Let me reply that the principle of Inter-national bi-metallism could not then be tested, as the nations had not then their Mints open to the unlimited coinage of both metals at a common ratio, and this is the indispensable condition for success. Each nation then acted solely for itself. Coinage was made from time to time as each Government thought best and at what ratio it thought fit, and the coins were excessively clipt and worn, and often debased by unscrupulous Governments. For instance, at the time of the great English re-coinage of 1695 so clipped and worn were the coins that, on the average, they fell short 50 per cent. of their proper weight, and the Exchequer lost £2, 400,000 on the operation. It is absurd to compare such a chaotic system with our perfect coinage regulations of nowadays. If a true and uniform bi-metallic system had existed in the 16th century, it would have tided over the influx of silver from South America, just as the French system tided over the influx of gold from California and Australia. Then it is objected by some that if an International agreement were made, gold, being the over-valued metal, would gradually leave the bimetallic countries, and silver would alone remain. Have these persons ever succeeded in showing where the gold would go to? The area we propose would contain a currency of £500,000,000 of gold coin, and £200,000,000 of full-valued silver coin, not counting token coins, which, of course, do not come within the purview of the question. I am supposing that the Union embraces France, Germany, the United States, and Great Britain, even without our Colonies and India. Is it possible that this large sum of £500,000,000 could go anywhere else, or be all used up in the Arts? The thing is absurd. These are the great creditor nations of the world; at least, the European ones are; money constantly flows to them from all other places; they can always keep what they need for their currency requirements. Besides, the other nations of the world which are mostly silver-using could have no motive in getting one metal rather than another, as both would be of exactly the value fixed by International agreement. The annual product of the mines at present is thought to be about £24,000,000 a year of gold, and about the same of silver. It is supposed that nearly half the gold is used in the Arts, or hoarded in India; and half the silver is used in the Arts and in. the silver-using nations of Asia. There only remain for all Europe and America, for purposes of coinage, about £12,000,000 of gold and about the same amount of silver, which is little enough to supply the wear and tear of these Continents and to meet the growing demands of so vast a population and so great a trade. It only represents an addition to the existing Stocks of 1 or 2 per cent. annually, and is quite insufficient to disturb the equilibrium between the metals. The fact is, that under a bi-metallic system the currencies of the principal nations would hardly be affected at all. Each country would keep the metal it preferred, and England would remain mainly gold-using, with this difference—that silver could be sent to the Bank when required, as is now the case with the Bank of France, and form a basis for note issues as well as gold. We are told that silver is inconvenient for large payments. This has been humorously called the "wheelbarrow" argument. The reply is that large payments would be made then as now by means of bank notes and cheques, just as is the case in France, the only difference being that the bank reserve will consist of two metals in place of one. If needful, it could be stipulated that silver coin should not be legal tender between man and man beyond £2, though of course no limit could be put upon its payment by banks. Another objection is that the legislation we propose will benefit the silver miners, especially in the United States; and a foolish prejudice is caused by this paltry argument. In fact, no benefit would accrue unless the present market ratio of 21 to 1 were raised. It is quite doubtful what an International Conference would do; it might agree to accept the present ratio or take 20 to 1, or 18 to 1, as the future ratio. Some intermediate ratio would probably be adopted. Suppose it is 20 to 1, how would that affect the American miners? America produces £9,000,000 of silver and £5,000,000 of gold. The surplus of silver is £4,000,000 annually. If that were raised 5 per cent. it represents a gain of £200,000 annually; if 10 per cent. it comes to £400,000 a year. The figures are so trifling that it is hardly worth talking of them when we contrast them with the National Debts and fixed charges which would be affected by the standard in which payment is made. The fact is, the whole silver product of America is worth no more than the annual yield of eggs! Great use is made by our opponents of the argument that England, being a creditor country, it is her interest to be paid in gold rather than in silver. That is the pith of the Amendment in the name of my right hon. Friend the Member for Leeds (Sir Lyon Playfair). But the great bulk of the annual remittances to England represent not gold interest, but industrial investments and freights; both of these would come to us quite the same, whatever the standard money might be. English investments abroad are mainly in mines, plantations, tea, coffee, and sugar estates, and those innumerable forms of enterprise which open up the new or backward countries of the world. The income from them in no way depends upon the money employed as the standard. The amount coming home for freights is supposed to be £50,000,000 annually. The total annual surplus of imports over exports, which is roughly supposed to measure the indebtedness to England, exceeds £100,000,000 a year. I doubt whether the remittances for gold interest, after deducting silver interest, exceed £25,000,000 annually, and that goes to a very small class of the richest people in this country. Let me quote from the Currency Commission (page 35)— The only gain is in connection with loans made in gold at fixed rates of interest, and the total gains from this class of investments should be reduced by the loss on similar investments made in silver or other currency which has depreciatad in comparison with gold. A largo portion of this gain is made at the expense of British colonies and dependencies such as India, and does not accrue to the country at large, but to a very limited class. This puts the whole case in a nutshell. The Member for Leeds seems to dread a torrent of silver coming into this country to re-pay debts contracted in gold. Let me assure him that the fear is purely imaginary. Payments to this country are all made in commodities, and will continue to be so made, whether the currency is gold, silver, or bi-metallic, just as they are made to France, which is also a creditor country, and annually receives a surplus of imports over exports. An Amendment is to be moved by the right hon. Gentleman the Member for London University (Sir J. Lubbock) implying that the trade of this country has prospered because we have had a gold standard. It has already been pointed out that the great prosperity of our trade came to an end about 1873–74, and did not experience a real and solid revival until last year, or the year before. Now, we virtually enjoyed the benefits of the bimetallic system until 1873–74. We could always geta fixed exchange between silver and gold at Paris, and this gave us identical money in all the world of commerce and wonderfully facilitated our trade with Asia. Between 1874 and 1887 there was a period of extraordinary depression. It is true that we are now experiencing a revival which would have come long before but for the suicidal contraction of the world's money through the demonetisation of silver. Another objection brought against our scheme is that London is the financial centre of the world, partly owing to its gold standard and the certainty that a bill on London can always be turned into gold. London is the financial centre because it has the largest reservoir of capital, and money can be borrowed here more freely than anywhere else. Were London, Paris, New York, and Berlin to be under the same monetary system, of course London would suffer no disadvantage, neither would there be any demand for gold rather than silver, as each metal would be equally useful in settling International balances. Some bankers dread a financial crisis of this great monetary change be made. Mr. Giffen has drawn an appalling picture of all bank depositors suddenly clamouring for payment in gold. This fear is quite imaginary. No such crisis occurred when the United States began coining silver as full legal tender, nor when the Currency Laws of many other countries have been altered. The change we propose would only come slowly after long deliberation by a Conference of the leading nations, and one may venture to predict that the price of silver in the open market would reach the ratio agreed on long before the time fixed for making it a legal tender. It would no doubt be agreed that the Mints of all the contracting Powers should be opened simultaneously at a certain date to the unlimited coinage of both gold and silver at a fixed ratio, each metal to be full legal tender for all debts; and the knowledge of this would equalise the value of the metals long beforehand, and take away all motive for creditors to call in their debts. If they were foolish enough to withdraw their deposits they would soon have, to replace them, as they could not make any use of them otherwise. It is said the compact will not be kept, and it will give way under stress of war, or national bankruptcy. There possibly might be a temporary suspension of specie payments by some nations of the group, just as France suspended for a short time during the war of 1870–71, but the treaty would stipulate that when specie payments were resumed it should be on the old basis. It should be remembered that the French ratio lasted 70 years in spite of numerous suspensions, of specie payments. The United States suspended specie payments during their Civil War, and all their specie was exported to Europe, without disturbing the French ratio. Italy and Austria suspended without any injurious result. The same result would be witnessed again, with this difference: that the plan we propose would be far wider and more secure in its foundations. The whole tendency of the time is towards International action, and there is no kind of action more necessary and beneficial than monetary legislation. The most plausible objection brought against us, and the one which most easily excites vulgar prejudice, is, that we favour Protection. I must ask permission to say a word or two about this. I utterly disclaim, for myself, the slightest desire to bring about Protection; all I wish is a just monetary standard, which will be best attained by using the two metals jointly, in place of either of them singly. I defy anyone to point out what article is "protected," except, perhaps, wheat, in the slightest possible way; but wheat would not be affected unless we alter the present ratio of 21 to 1. Suppose the ratio is altered to 20 to 1, or 18 to 1, a slight check would be given to the import of wheat from India; but Indian wheat forms but a small part of our whole import. The great bulk of our wheat comes from America and Russia, and the check to Indian wheat would probably not add more than 1s. or 2s. to the general price of wheat; and that would not arise from imposing a Protective Duty but from taking off some of the bounty which is practically given to Indian exports by the low rate of exchange. If the question of Protection is to be introduced into this discussion, then it will be found to tell far more forcibly against our opponents. What do they seek but the protection of gold against silver? They wish, as far as lies in their power, to "boycott" silver, and throw the world upon gold alone, even though such a course should double the value of gold, and double the weight of the £4,000,000,000 of National Debts payable in gold, and the far larger volume of private debts in the gold-using countries. In trying to "boycott" silver, they are giving Protection to the wealthy capitalist class, just as clearly as the old Corn Laws did to the landowners of this country. The only difference is that the amounts involved are much larger, and the protected class much richer, and the confiscation of the fruits of the toilers far more sweeping than under the old system of Corn Laws. When the masses of this country awake, as those of America have awaked, to the magnitude of this question, they will brush away this idle talk that we are trying to restore Protection. They will discover that our protected classes are the wealthy money lenders and bondholders who, through the demonetisation of silver, have robbed the debtor class as much as if 20 per cent. had been added to the weight of the sovereign. Lastly, we are charged with a desire to raise prices artificially. I reply, we really want to prevent forcing them down artificially by contracting the money supply of the world. We want to use the two metals which Nature gives automatically, and let prices fluctuate naturally according as Nature gives us more or less money. We wish to minimise the operation of human law, and accept as far as possible the law of Nature. That is true Free Trade. To use both metals is true Free Trade, while laws preventing the use of one of them is Protection. We wish to use both metals, and in doing so we believe trade will be most stable and least affected by currency legislation. Besides, our plan will make it much easier for countries like Austria, Russia, and some of the States of South America to resume specie payments. At present they must resume, if they do it at all, in gold alone; but if bi-metallism were adopted, they could resume in both gold and silver; they could draw their supplies of specie from the whole money of the world instead of from only one-half of it. The plan we propose makes in favour of hard money, that is honest money all the world over. Our scheme is equally opposed to inflating the currency or contracting it. We believe in the convertibility of the bank note and in a uniform and honest standard of value all the world over; and we believe that the two metals tied together form a more staple standard than either separately. Cold discoveries and silver discoveries seem to be made alternately, and each metal fluctuates more violently by itself than the two when joined together. I have trespassed on the time of the House for too long; my only apology is the magnitude and difficulty of the subject. I have sought to put the main features of the case as clearly as I could before the House, and I hope it will be seen that the scheme we advocate is theoretically, as well as practically, the most perfect. It cannot be denied that the recent revival of trade tells against our cause. The Budget Statement shows clearly a state of general prosperity; bat this prosperity will not last for ever. Fresh monetary dislocations may again upset the trade of the world. Had America repealed the Bland Act, and ceased coining silver, we should have had another cataclysm; fortunately, she is going in the other direction, and tending more and more towards the re-monetisation of silver. Franco still holds a very largo stock of silver; we have no security how she will act with it until an International agreement is arrived at. Germany still holds a considerable quantity of its old silver, circulating like that of France, at its old ratio of 15½ to 1. The whole situation is provisional and uncertain, and no one can guess what developments may occur within the next few years. We may have entire re-monetisation of silver in America, coming along with a great yield of gold in South Africa, which may bring back the old ratio of the metals; or we may have fresh demonetisation of silver which may force it down much lower than has yet been seen. The present is a favourable time for International negotiations. The Temple of Janus is closed. Peace and goodwill reign among the nations of the world. Is not this a fitting time to call a Conference to settle this vexed and complicated question? We have had an International Labour Conference with good results. Can we not have an International Monetary Conference with even better results? I appeal to the House to give a vote in favour of Progress, Peace, and Free Trade, and to lead the way in a policy that makes for justice all the world over.

Amendment proposed, To leave out from the word "That" to the end of the Question, in order to add the words "in the opinion of this House the evils which have resulted from the divergence in the relative value of silver and gold following the monetary changes which took place in Europe in 1873, can best he dealt with by a Conference of the chief Commercial Nations of the World called to consider whether a bi-metallic system can he re-established by International agreement in the interest of all the Nations concerned,"—(Mr. Samuel Smith,) —instead thereof.

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

*(5.10.) SIR W. HOULDSWOBTH (Manchester, N.W.)

I desire to second the Motion. There are two propositions in the Resolution which will be generally accepted—first, that about 1873 there took place a great monetary change in Europe; and, secondly, that from that date an unprecedented divergence in the relative value of gold and silver occurred. There is a third proposition intimately connected with the other two, namely, that certain evils have resulted from that divergence between silver and gold. The monetary change to which I refer was the closing of the Mints of France and the Latin Union to the free coinage of silver at a fixed ratio. The divergence in the relative value of silver and gold which followed was continuous and extensive. In 1872 silver was at 60d.; in 1889 it had fallen to 42d. These are facts which cannot be denied. There is, however, a further question, which I admit may be a subject of controversy, although I should have thought that after the Report of the Royal Commission, supported as it is by the unanimous opinion of all the political economists of the day, it would have been finally set at rest. That question is whether any connection existed between the monetary change of which I have spoken and the great divergence that took place. Our argument is this: Before 1873, when Mints were open in Europe for the free coinage of silver at a fixed ratio, that circumstance tied gold to silver, and, as a matter of fact, the relative value between them remained constant. But in 1873, when those Mints were closed, new conditions arose. Silver then became a commodity, and was left entirely to the action of the laws of supply and demand. The finding of the Royal Commission on this point is absolute and unanimous. The Commissioners arrived at these two conclusions—first, that during the period before 1873, there must have been some steadying influence, apart from the laws of supply and demand, that kept the relative value of gold and silver approximately stable; and, secondly, that after 1873 that steadying influence must have been removed. After looking over the whole field that was brought before them, they could discover no other steadying influence which could produce this effect except the Bi-metallic Law of France. It was due to bi-metallism that the ratio between gold and silver was maintained between 1803 and 1873. In their investigations of the variations in the value of silver in the 40 years preceding 1873, between the highest and the lowest point, they found the difference was only 3d. When they came to the 14 years after 1873, they found the difference between the highest and the lowest point was 15d. If they had continued their investigations to 1889, they would have found it reached 17d. Further, the Commission found that the maximum fluctuation in 1872 was not more than five-eights of a penny, whereas in 1886 it was not less than 3d. Seeking for the causes of these facts, the Commission found that while in the 10 years, from 1831 to 1840, the production of silver was double that of gold, in the years from 1851 to 1855 it was only one-fourth of gold, and yet, notwithstanding these fluctuations of supply, the market price of silver remained about the same during the whole period. Next, taking the period after 1873, they found the supply of gold and silver had been about equal, and yet the fluctuations in the market price of silver varied from 15½ to 1 to 18 to 1. With results such as these before them the Commissioners unanimously came to the conclusions I have mentioned. Those conclusions have been contested in the public Press, and by no less an authority than Mr. Giffen, to whom reference has already been made. Mr. Giffen has denied that bi-metallism had any effect whatever in maintaining the ratio before 1873, and that the rupture of the system did not cause the fall in the price of silver. Now, Mr. Giffen's position on this subject is rather peculiar. He gave very valuable evidence before the Commission, and presented statistics which are the foundation of our conclusions, and I do not desire in any degree to disparage that eminent and useful public servant. But it is to be regretted that he declined to give the Commission any assistance in the investigation of the practical part of this question, and absolutely refused to lay his views before the Commission. The excuse he gives, apparently, is that he was asked to come before the Commission as the champion of mono-metallism. All I can say is that the Commissioners, as a body, certainly never asked Mr. Giffen to appear in that capacity, though, of course, I cannot speak for the views of individual Members of the Commission. Mr. Giffen may, however, have had good reasons for not assisting us in our investigations. But, at any rate, I think it was a very questionable proceeding on his part when, immediately the Report was published, he violently attacked that Report, and certain of the Commissioners personally. And when Mr. Giffen went so far as to characterise the Report of the Commission as a scandal of the first magnitude, I can only say that his views on this subject would have had more weight if he had addressed himself to a consideration of the Report in a more judicial spirit. The main argument of Mr. Giffen is, that during the period of bi-metallism, there were variations in the ratio, and this he urges as if it were in itself destructive of our theory of bi-metallism. Mr. Giffen went back as far as the year 1581, and certainly gave figures showing variations between that year and 1803 of 23 to 27 per cent. But we decline to accept that period as one of effective bimetallism. From 1803 to 1873, which bi-metallists are willing to accept as a scientific period of bimetallism, though it was only in operation over a limited area, the variations only ranged from Z½-to 3 per cent. But it is an entire mistake to suppose that variations are inconsistent with bi-metallism. It does not follow that the market ratio is always the same as the legal ratio. The legal ratio is not an absolute, but a controlling force, keeping the variations in the market ratio within certain definite limits. It acts like the governor of a steam engine, and the effect of bi-metallism is clearly manifested during the years between 1803 and 1873 by the fact that the variations of ratio were very slight compared to what they had been formerly and to what they have been since. Mr. Giffen's opinion carries weight, I know; I would therefore like to strengthen our case by quotations from undoubted authorities on such subjects—Professor Walker, Professor Jevons, and Mr. Bagehot. [Here follow quotations.] Thus I think I have shown that the Bi-metallic Law is a real power which can bind the legal ratio and the market ratio together within certain variations; and that is the basis of our application to the House of Commons to-night to entertain and consider the question. I will now proceed to say a few words on what, perhaps, the House will consider of more importance, and that is the evils which we believe have arisen from this divergence in the relative value of gold and silver which has undoubtedly taken place since 1873. 1 notice that the Amendment of the right hon. Gentleman the Member for the University of London says there is no justification for any fundamental change in the standard of value. Well, I am rather at a loss to understand fully what ho means by "no justification." Does he mean that no effect whatever has been produced by this divergence between silver and gold since 1873? Does he mean to say there has been no injury, no loss, no effect whatever upon trade? I cannot think he for a moment would make such an assertion, because it is utterly opposed to the Report which he himself signed. It is there distinctly acknowledged by the Commissioners, in that portion of the Report to which the name of the right hon. Gentleman is attached, that there had been a serious amount of loss and embarrassment and injury to trade. If he means that there has not been sufficient justification for this change, then I should like him, when he addresses the House, to tell us what amount of injury, damage, and loss he thinks is necessary in order to justify the change which we propose. It can be proved both from personal knowledge, and also from statistics, that, during the last 18 years, the country has been going through a period of depression which has been more intense and more peculiar than any that has preceded it for many years before, and it has not been accounted for in any way except by monetary causes. A Commission was appointed to examine carefully into the cause of the depression of trade in 1882. It took an immense amount of evidence, yet it could not put its finger upon any real reason why there should have been such a depression. But the moment that the Currency Com- mission met, as will be found from their Report, paragraph after paragraph show they acknowledged that monetary causes had produced injury and loss and depression. I know there is a prevalent opinion that trade is in a satisfactory state at the present moment, but I think a great deal more has been made of the late improvement than is justified by the facts. I still hope that the improvement may not pass away, but I noticed the right hon. Gentleman the Member for Derby, last night, seemed to be more sanguine than I am as to the improvement. He used the expression, "trade was reviving." From my knowledge, I should rather say that trade had revived, and that it is again declining. Whether that decline will go on or not I do not wish to anticipate, but we have had this very peculiar experience during the last 18 years, which we never had before in commercial centres, that while we have had slight periods of improvement, they have only continued for a month or two, and then they have passed away. We have had what the Chancellor of the Exchequer, last night, very happily called "false dawns." During the last 18 years, when there has been an improvement in trade it has lasted only for a few months at a time, or 12 months at the outside. I do not know whether the right hon. Gentleman the Member for Derby has noticed the Returns of the exports for last mouth. They are very startling, because they show a falling off of £100,000,000. I do not wish to make too much of this. I do not think it represents a real decline of trade. To a large extent it may be accounted for by other causes, but, at the same time, from my own knowledge of the state of trade both in the iron industry and in the cotton industry, I have no hesitation in saying, that if the present state of things continue the Board of Trade Returns during the next month and the month after will be materially affected. There is no doubt that not only have prices fallen, but the visible demand from abroad, and from the home markets, in both the cotton and the iron industry is perceptibly less than it was. Take a longer period. Last year was a good year, the best year we have had for some time. The imports and exports then reached £740,000,000. But go back to 1883; we then had exports and imports as large. That is to say, we have made no progress whatever since 1883, and in the intervening period of years the total amount of exports and imports was materially less. I should just like to refer the House to some statements that have appeared in the Pall Mall Gazette, some sensational paragraphs which I think I ought to notice. A statement has been made that the cotton industry of Oldham is making large profits. Some of these profits are given. One remarkable case is mentioned — one amongst others — of a firm which has, so it is said, made 39 per cent. profit. To say the least, that is a most misleading statement, because, as far as it is accurate, it only means that profits have been made at the rate of 39 per cent. for the last quarter. It is a mistake to assume that this was the profit of the past twelve months. They have made nothing of the sort.

An hon. MEMBER

The statement says so—per annum.

*SIR W. HOULDSWORTH

Then it is untrue. But the only way in which 39 per cent., even for the quarter, could be brought out is by calculating the amount of profit on the share capital only. Now, it is well known that in many cases, especially in Oldham, the borrowed capital is two or three, or even four times more than the share capital. The consequence is that if the profits that have actually been made were divided over the whole of the capital employed in the business, the percentage would be reduced very materially. And a curious fact is this, that although that statement is put forward to induce people to believe that the cotton industry is doing well, yet out of the 19 mills which were referred to in the Pall Mall Gazette, in 12 of those mills the shares are actually at a discount, and out of 92 mills in the Oldham Official List, in 54 the shares are similarly at a discount. It is perfectly clear, therefore, these figures do not give a true representation of the state of affairs. But these figures would have to be considered from another point of view if accepted as real profits made in this industry. I have a case here of a spinning business, which shows a profit for the last quarter of £3,385, but the way in which that profit has been made was, at any rate, as far as £2,500 was concerned, by speculating in cotton—not by legitimate working. Now, I should like to bring before the House some figures, I think, of rather an astonishing character. I do not adduce them for one moment for the purpose of showing what the effect of the divergence between silver and gold has been; but I think they are sufficiently startling to induce the House to consider the state in which our industries are, as compared with those of foreign countries. The statement I have is a comparison between 1870 and 1884, and I find that, taking the imports and exports of 11 of the large Continental nations, they have increased by no less than between 50 and 60 per cent. in those years, whereas those of this country, in the same period, have only increased by 11 per cent. Now what the divergence in the relative value of silver and gold really did, especially when there was a heavy fall in the value of silver, was to dislocate the whole machinery of trade. From the merchants down to the workpeople they are all, more or less, affected the moment you have anything like a serious divergence in the relative value of the two currencies, gold and silver. It is very simple to see how it affects our own country. Silver, the House will remember, has fallen 30 per cent. Whenever a fall takes place in the gold price of silver one of two things must occur. Either the gold price of commodities must fall, or the silver price must rise, or an adjustment must be brought about by both these operations combined. You must have an adjustment of some sort or another. The gold price of silver fell 30 per cent., but did silver prices rise? We find they did not. The consequence is, the whole weight fell upon gold, and an adjustment had to be brought about, and, as a matter of fact, was brought about, by the fall in gold prices. Silver prices remained as they were. Now, what is the effect of a fall in gold prices of anything like 30 per cent? Three classes are specially affected The merchants, the agricultural industry. and the manufacturing industry. The merchant, to a great extent, is not in the same position as the capitalist or the wage-earner, who is engaged in industrial operations. The merchant is more independent. What he really suffers from is not so much the fall in silver as the fluctuations in the rate of exchange. His business is quite different from what it was a few years ago. It was not then so dependent on the slight variations which take place in prices from day to day. But now transactions are carried out by telegraph from Calcutta to Manchester direct, and generally the transaction from the buying of the cotton to the selling of the article produced is completed in one day. The consequence is that the profit which the merchant receives is very small indeed, being nothing more than a small commission for his trouble in carrying out the transaction; and unless, day by day, there is constant business he suffers considerable loss; and he finds exchange varies frequently, that business, instead of being steady from day to day or from week to week, according to the variations of demand, is subjected to a series of fits and starts. Whenever a new fall takes place business is stopped until the exigency of the manufacturer forces him to take the lower gold price, and so, from time to time, there are checks upon trade which are fatal to the successful carrying on of the merchant's business. I think the Chancellor of the Exchequer has fully recognised this, because in the Conference alluded to, and which he attended, I noticed he put in the fore front, in regard to the difficulties which had arisen at that time through the fall silver, the case of the merchant. Since then the evil has been intensified. I put the case of the agriculturist and the manufacturer together, for, in most respects, they may be considered in conjunction for the present purpose. The effect of the fall in the gold price of silver has been to drive down gold prices in this country, and those engaged in industry, whether agricultural or manufacturing, have had to accept a lower gold price. It has not been the case of one fall of 30 per cent., but it has been a gradual going down of prices during the last eight, 10, or 15 years, and lower, step by step, has fallen the gold price which the manufacturer receives for his goods. The House should understand that this gold price comes down instantly if a fall has taken place in the gold price of silver. Those who deal in wholesale markets are aware that they are very sensitive to any action or any rumour which has a tendency to affect prices, and the con- sequence is that the moment there is anything in the atmosphere which ought to lower gold price immediately the gold price goes down in the wholesale market. But what position is the manufacturer in? If the manufacturer has to reduce the gold price which he receives in exchange for his goods by 5 or 10 per cent. he suffers immediately loss unless he can at once reduce the cost of his production by a similar amount. The items which make up the cost of production are— first, his rent, including interest to bankers and to mortgagees; secondly, articles consumed in the business; and, thirdly, wages. With regard to rent and interest on mortgages the manufacturer cannot get the rate reduced immediately, as he is often under a contract for years. With regard to articles of consumption, he is often under contract for 12 months, or has to deal with a middleman, who does not freely give him the benefit of the lower gold prices. As to wages, they are not adjusted day by day, and cannot be adjusted at all except with a considerable amount of friction. I have here some figures as to the effect of this fall in gold prices upon a particular business. In 1874 I find that the selling value fell from 100 to 88, and the cost of production, exclusive of raw material, only fell from 100 to 99; in 1875 the selling value fell to 81, and the cost of production to 94. Then, in 1876, the selling value fell to 65, whilst the cost of production fell only to 86. During that period, therefore, the manufacturer was reduced to cost price, or possibly something below it, and so was gradually adding to his indebtedness to his bankers and others, and getting a millstone around his neck which he could not throw off. This explains the depression which has been prevalent in the textile and mining and iron industries during the last 18 years, while there has been this steady fall in the gold price, attributable to the fact that there has been a fall in the gold price of silver. It will be said, I have no doubt, by some Members that this is, after all, only a question of a little loss to the capitalist which he can very well bear. But it is a much larger question, because, although the brunt falls upon him first, the effect goes downwards to the wage-earner, who, year after year, has been called upon to suffer some loss of wages. Then no doubt it will be said—I think it was said before the Royal Com mission—"Yes, but although the wage-earner has less wages, still he cannot be any the worse off, because the price of commodities will also be lower." I think it will be found, however, that the wage-earner does not get the benefit in the fall in the price of commodities; certainly not for a very long time, and that is the reason why the working classes join their employers so heartily in this movement, believing it is at the root of the depression and of the loss which they have sustained during the last 18 years. I should like to strengthen my observations by a quotation from the Report of the Royal Commission signed by those Members of the Commission who do not recommend bi-metallism. They say— So far as the fall in prices can be connected with the currency, it must tend to diminish the margin of profit, or even to cause it to disappear altogether. This necessarily results in an effort on the part of the manufacturer to economise the cost of production by reducing the wages of the operatives. Even if the manufacturers could succeed in reducing wages sufficiently to maintain their former position, this could only be done after considerable struggles, and an amount of friction very undesirable. Again— It seems by no means clear that there has been a fall in the price of all that the wage-earner needs, and upon which his wages are expended, equivalent to the reduction of wages which has, in fact, taken place. I think that there can be no doubt that, although the brunt of the loss may fall upon the manufacturer and the farmer, the wage-earner is ultimately the greatest sufferer. That is the reason why the wage-earning classes have joined the employers in this movement. They believe that they have discovered in our present system of currency, the cause of the depression from which they have suffered. This is especially the view taken by the people of Lancashire. Although trade has improved, upon the whole, the improvement in Lancashire has been very slight and very short lived. Another point I ought to mention is the stimulus that has been given to cotton spinning in India. This question was examined by a Committee of the Manchester Chamber of Commerce, and their Report shows that a great part of the cotton spinning industry of Lancashire has been transferred to India, where, as an effect of the fall in exchange, spinning mills have been stimulated to an unnatural extent, and while the exports of yarn from India, to China and Japan, have increased between 1876 and 1887 from 70,000,000 lbs. to 113,000,000 lbs., the exports from Lancashire to these counties have remained stationary, and, during some periods, have actually decreased. I find, in point of fact, that in 1887 the exports to China and Japan were considerably less than in 1881, and while the trade of these English mills has been taken away from Lancashire, Lancashire has found nothing to put in its place. For the total exports of cotton yarn from England has decreased in 1887 as compared with 1881 by 4,000,000 lbs. I ought perhaps to notice, however, that, within the last few months, a reaction has taken place in India, as, according to the Bombay Gazette, the cotton industry is now in a somewhat critical state in that country, owing to the fact that too many people have been tempted to engage in it. This is the natural consequence of an artificial stimulus. What we want, in order to correct the evils I have attempted to describe, is not inflation or protection, but stability. But how we are to get stability in our standard of value, as long as we have no connecting link between gold and silver, it is impossible for me to conceive. One half of the British Empire uses silver, while the other half carries on its dealings in gold. And, consequently, it will not be too much to say that it will be absolutely necessary, in the course of a few years, to establish some connecting tie between the two currencies employed in the British Empire, to say nothing about other silver-using countries. In one sense, I may say, we bi-metallists are mono-metallists, because we believe that if there could be one metal which would serve as a currency for the whole world, that would he the best system we could adopt. As it is, however, one-half of the world uses, and will use, silver, and the other half uses gold. The question to be solved is, whether we can so connect the two currencies as to tie silver and gold together, so that, although you may have different currencies and different coins, you will have but one standard of value. I have to thank the House very much for the patience with which it has listened to what, I am afraid, has been an exceedingly dry statement, full of matters of detail, but the question is certainly a very serious one. It is said that the price of silver is being raised in America, but what we have really to look at is, whether the price of silver will be maintained in a stable condition? As far as I am personally concerned, I do not care very much what ratio may be accepted as long as a stable ratio is established. If a Conference is called to establish a ratio, I have no doubt it will be able to do so; but that ratio will probably not be widely different from that which exists between the two metals at the time the ratio is fixed. The main point is, that whatever is done should be done with as little change as possible, and, having said this, I trust that the House will very seriously consider this important question as one which vitally affects the interests of trade.

*(6.45.) THE FIRST LORD OF THE TREASURY (Mr. W. H. SMITH,) Strand, Westminster

Sir, I join with my hon. Friend behind me and the hon. Member who has spoken from the other side of the House in attributing the highest importance to this question. I think the House is indebted to them for the moderation with which they have stated their case, and the evident desire which they manifested to reach a sound and satisfactory conclusion. But their speeches have only shown the great difficulties which surround the question. My hon. Friend has stated that the fall in prices is attributable wholly to the fall in the price of silver. It is, no doubt, attributable to that, concurrently with other causes. But I have not been able to find any evidence, either in the arguments addressed to this House or in the Report of the Commission, or elsewhere, which is absolutely conclusive to show that the fall of silver is, in point of fact, intimately connected with the fall in the value of commodities in different parts of the world. We must ask those who desire this enormous change in the currency of this country, upon which our great commercial transactions rest, in what way they connect the one result with the other? I have been at some pains to examine our Trade Reports during the last few years. There has been a fall which is most distressing to many of those interests which have been engaged in the production of particular commodities. But the fall has not been uniform or constant. There have been variations in prices; there are now variations of a very remarkable character. I will refer to some prices of our imports and exports between the years 1885 and 1889. Many articles have fallen considerably; others, like coffee and fish, have risen. Animals —oxen and sheep—have fallen 16 and 19 per cent. But these very articles, which in 1889 had fallen, will be shown in 1890 to have risen. I believe wheat is now dearer than it has been for some years. But coffee, fish, hemp, jute, have risen from 13 to 31 per cent. Copper ore is dearer than it was in 1885. Iron ore has risen 12 per cent, and manufactured articles are considerably dearer than they were. These variations in prices are shown to exist notwithstanding the continued fall in silver. Some articles have thus risen, while others have fallen in value. But I think my hon. Friends will be prepared to admit that if a universal law had applied to the value of a great number of articles which are abstracted from the ground or grown on the ground, or manufactured, uniformly with the fall or rise of silver, we should have had a different return from that which is shown in the public documents to which I have referred. My hon. Friend has said that what he desires is stability. We all recognise the force of that. But he proposes to link silver with gold, in order that this stability shall be maintained. That is to say, that the metal which has fluctuated in price shall be joined with gold, which has not fluctuated. ["No, no."] I have not heard any proof that there has been a fluctuation in the value of gold. I think I have not unfairly stated the view which my hon. Friend takes. He has argued with great ability that the owner of silver ought to be able to take a bar of silver to the Mint and insist that it shall be turned into coin at a fixed rate. It has been profitable for the owners of silver mines to produce an enormously increased amount of silver during the last 20 years. The production has quadrupled and reached 24 millions a year. It has been possible for them to sell this silver at 42d. an ounce. If it is profitable to sell at that price it would be possible, if a fixed ratio were established, by tendering at a higher value than 42d., to make a larger profit and increase the quantity tendered to the Mint and request that it should be returned in coin. The result would be to produce that excess of silver coinage which it was the object of the Latin Union in 1873 to put an end to. Why should the members of the Latin Union decline to continue the system which prevailed up to 1873? I can only assume—I do not positively know—that the increase of the stores of silver alarmed the members of the Latin Union. The German Government declined to continue the coinage of silver. My hon. Friend behind me has referred to the Indian mills and the bounty which the fall in silver confers upon them. I quite agree that the Indian producer is at some advantage as compared with this country. Admitting that the English merchant is at some disadvantage as compared with the factory owner in Bombay, we cannot generalise from that on the whole trade with India. The statistics show that in 1873 990,000,000 yards of cotton goods were exported from the United Kingdom to British India. That figure increased in 1877 to 1,305,000,000 yards; in 1882 to 1,522,000,000 yards; and in 1887 to 1,812,000,000 yards. In other words, in spite of the enormous development of the cotton trade in India, our exports to India of cotton goods increased 50 per cent. between 1877 and 1887.

*SIR W. HOULDSWORTH

May I explain that the Indian mills do not manufacture piece goods to any great extent? The question is as to the yarns they produce.

*MR. W. H. SMITH

My hon. Friend is in possession of technical knowledge which I do not possess, and I am quite sure he is accurate in his statement; but I may at least rely on this: that notwithstanding all the disadvantages which I admit the exchange imposes on the English merchant, there has been during the last 15 years a very considerable increase in the cotton trade with India, although during that period the rate of exchange has fallen from 1s. l1d. to 1s. 5d. Therefore the trade must have been, on the whole, profitable, and no doubt it has been conducted with the wisdom and skill which Lancashire merchants always display in their business. The value of the exports of the United Kingdom to India—and that means largely the export of Lancashire goods — shows an increase of 14 per cent. during the quinquennial period ending 1882, and another increase of 14 per cent. during the quinquennial period ending 1887. I admit that there has been an enormous increase in the number of spindles and looms in India and a great increase in the export of yarn. In 187G the spindles numbered 1,100,000, and in 1887 they numbered 2,200,000. Seeing that we share in the prosperity of India, I ask whether that is a circumstance to be deplored—whether we have any right to regret that India is developing manufactures and supplying so largely that part of the world with its manufactures? Would it be right, by adopting any change in our financial policy, to check an industry which appears to be so successful? My hon. Friend said that the ratio to be determined by any particular international agreement was a matter of no consequence. I think it is a matter of very considerable consequence. The very first question that would be asked of us if we proposed a Conference would be, "What ratio do you propose to fix between the values of silver and gold? We are very large holders of silver, and we shall be largely influenced by the view which you take. Silver at the present moment is 45d. or 46d. an ounce. Before we enter this Conference we want to know whether you are prepared to re-monetise silver at the price which it cost us some 10 or 15 years ago." If a man had debts owing to him he would, I think, hesitate to receive payment for them in silver forced 20 or 30 per cent. above its present value. I listened attentively to the speech of the hon. Gentleman who opened the debate, and I observed that he was of opinion that, somehow or other, those to whom debts arc due are exacting by fraud something like £30,000,000 a year from their debtors I have not been able to see how he arrived at that conclusion. I do see that he would propose to pay them in a currency and metal which would probably be worth less by £30,000,000 a year than the metal and currency in which they are at present entitled to be paid.

*MR. S. SMITH

My argument was that £200,000,000 are annually paid by this country for fixed charges, contracted mostly when gold and silver were at a ratio of 15½ to 1. The demonetisation of silver lowered the value of silver 30 per cent. and increased that of gold 40 per cent; and as the increased purchasing power of gold is due to this circumstance, creditors are now receiving 20 per cent. more than they are entitled to on the basis on which the debts were contracted.

*MR. W. H. SMITH

I should like the hon. Gentleman to go into a court of morals and endeavour to prove his case. I should be glad to listen to the argument that would be urged on both sides, and to the decision that would be given. He says that these debts were contracted on a bi-metallic basis. They were contracted upon the basis of the currency which was established in 1816. Everyman who has borrowed in gold is bound to pay in gold, and even in America there are gold debts and silver debts. This is not the first time that the House of Commons has debated the subject of bi-metallism. My attention has been drawn to a Motion made by Mr. Attwood just 60 years ago. He moved— That it is expedient to repeal so much of the Act 56 George III., c. 68, as declares gold coins the only legal tender in payment of all sums beyond the amount of 40s., and to establish that gold and silver coins of the realm, coined in the relative proportion of 15⅕ lb. weight of sterling silver to 1lb. of sterling gold, shall be a legal tender in all money engagements, as directed and ordered by the Proclamation of the fourth year of George I. When the hon. Gentleman opposite is prepared to put a distinct proposition before the House as to the value at which silver is to be re-monetised we may understand what it will involve. It was pointed out by Mr. Herries, in the debate on Mr. Attwood's Motion, that— Every man who had claims payable upon demand, every man who held notes of small or great value, every man who had debts outstanding would, if he secured the amount of what was due to him before this Resolution passed into law, get the whole of his money; whereas if he delayed beyond that period he could only get £95 for every £100. To pass such a Resolution, Mr. Herries said, would be the greatest of disasters to a mercantile country. It would result in this: that all those who were entitled to demand money advanced by them would instantly require that it should be paid, and in the coin and currency in which the debt had been contracted. Mr. Herries pointed out, with overwhelming force, that the inevitable result of such a sudden change in the basis of our circulation and mercantile transactions would be to produce a panic, with absolutely disastrous consequences. A change is proposed to be made because it would be advantageous to the debtor, But if that be so, the creditor has a right to say, "I will not wait for this change. I insist upon having while I can all that belongs to me." I appeal to hon. Gentlemen, considering the vast credit transactions which go on in this country, considering the transactions which we have with the whole world, to form some idea of the disasters which would result from such a desire on the part of the creditors to claim what was due to them before such a change was made. Sir Robert Peel, on that occasion, said the notion of a double standard was utterly fallacious and would be found utterly impracticable. I entertain the same view. I believe that the proposal is impracticable, and that any attempt to carry it out would produce a terrible state of disaster. I need not apologise for quoting the words of Lord Althorp, when he said— He was perfectly satisfied that it would be utterly impossible to alter the value of our money without producing an effect upon the commerce of the country that, with reference not only to our exchanges with foreign countries but to our domestic affairs, must be in the highest degree mischievous and destructive. It was of the utmost importance that the measure of value should remain fixed, and he, for one, therefore, would not consent to any further alteration in our monetary system. There has been throughout the discussion a suggestion of the scarcity of money, and the necessity of monetising silver in order to afford sufficient currency for the transactions of the world. I speak with great humility, because I am not a great financial authority; but it does appear to me that silver and gold have little to do beyond constituting a measure of value —a measure of value something like that famous standard yard locked up in the Board of Trade. Within the last few years there has been a development of our banking system all over the world to such an extent that gold for the purpose of actual commerce and trade has become simply the measure of value, and I am not able in the slightest degree to detect any evidence of a deficiency of gold. One of the first means of detecting it would be in in the discounts. A scarcity of gold raises the rate of discount. But during the last 15 years the rate of discount has been extremely low in this country. There has been no absence of credit, and there has been no deficiency in that material without which enterprise cannot proceed. I have looked into the average rates of discount from 1874 to 1888, and I find that in only one year, 1882, when it was 4⅛, did the average exceed 3¾. It ranged from 3 and 3¼ to 2, 2¼, 2¾, and 2⅛. That is a conclusive proof that there was plenty of what I should call mercantile money for the purposes of the business of the world. There has been a great fall of prices in wheat, and many other articles; but I venture to maintain the opinion that that fall is due rather to the abundance of money than to its deficiency, to the enterprise which has prevailed throughout the world in a time of general peace, and the facility with which men can enter into vast commercial transactions. We are told that railways and steamboats existed before 1874. They did exist; bat the development of the world by railways and steamboats has been something absolutely enormous during the last 15 years. There is no comparison between 1890 and 1874 in the facilities afforded to the trader, the merchant, the producer, in all parts of the world. Railways bring produce from distant parts of India, for instance, to the coast, steamers bring it from the const to our wharves and quays at a price which hardly exceeds the cost of transit from New York 20 years ago. These changes account largely for the great fall in prices which has taken place. But that fall is not universal. It is confined largely to articles of universal production, which can be brought to our markets from all parts of the world. But articles limited in production, such as articles of art, have increased, and will continue to increase, in value. If that be the case, the argument based upon the fall of silver is not a sound argument. I agree with the paragraph in the Report which says that the change proposed would be a leap in the dark. I feel that it would be a tremendous leap in the dark, and that we have no evidence that the change proposed would be a sound one, or that it would not produce disastrous consequences. On these grounds, not that I am indifferent to the views expressed by the Lancashire operatives.

or that I do not sympathise with those who are in distress, I must for myself individually decline to assume the responsibility of recommending to the House a change which I regard as dangerous, and as not justified by any of the facts or elements involved in the case.

(7.26.) SIR W. HARCOURT (Derby)

I was glad to hear the sentiments of strong common-sense that fell from the First Lord of the Treasury. But I confess I was a little surprised that the head of the English Treasury, on a subject which affects so greatly English commerce and credit, says that he speaks for himself only and individually. I entirely agree in the views the right hon. Gentleman has expressed; but I have also to convoy to the House opinions much more valuable than any I could offer. My right hon. Friend the Member for Mid Lothian (Mr. Gladstone) has also very clear and definite opinions on the subject, and, occupying the position which he holds, it is right that those opinions should be known. This question goes to the root of the existence of a great commercial country. I confess I have never been able myself to grasp the transcendental formula, of "tying two metals by a ratio." That is really a sort of philosophising phrase to express that you want to pay a debt in a metal of less value than that in which the debt was supposed to be contracted. These scientific formula; of tying metals together by a ratio only conceal what is a very simple fact. It is said that we lived some 15 years ago in the halcyon days of bi-metallism; but if we did, we did not live in that condition by any will or judgment of our own. The judgment of the whole of English statesmen at that time, and down to the present time, was, that there should be a mono-metallic standard. It is supposed that the bi-metallism of France controlled the commercial relations of the world. How could it be that a country which had only a limited foreign trade should be able to operate so immensely on the commercial relations of the world? If this is so admirable a system, why has the Latin Union abandoned it? have never heard an answer to that question. Why is it that the world, instead of imitating the admirable example of the bi-metallism of France, has rushed to copy the disastrous and ruinous mono-metallism of England? You may, or you may not, obtain an agreement with other countries; but after you have got an agreement, what security have you that that agreement will be maintained? Supposing that you can get an agreement with the other Powers of Europe in order to make this enormous change, where would you be if one of the Powers in some great crisis, such as a European war, abandoned this agreement? It would knock the keystone out of the whole of the monetary and commercial system of England. At present you have your own financial basis, your own commercial system, which have been unparalleled in the history of the world, founded as they are on the principles on which we now rely. But you are asked to abandon that system and to adopt a system which the advocates of bi-metallism admit can only exist by an almost universal agreement with other Powers. That is to say, you are to go into a partnership with all the other Powers of Europe with respect to your trade, finance, and commercial prosperity. I say that this is a most dangerous thing for you to attempt. Suppose we had been in the position of having an international agreement in 1870. France and Germany were going to war. Supposing Germany had conceived that it would have been of advantage to her in that life struggle to attract a great deal of gold to Germany; and supposing she had been a party to this international agreement, and had thought it would be to her advantage to terminate her connection with the Bi-metallic Union, would she not have done it at once? Of course she would, and the finances of England would have been thrown into a condition of confusion by resting on an agreement of this character. Why is this general agreement wanted? If you choose to overvalue your silver, and to say it shall boar a ratio of 1 to 15 instead of a ratio of 1 to 22, the gold will, of course, go away from the country. But the bi-metallist answer is that if you get a universal agreement the gold has nowhere to go to. Yes; but in the event, say, of Germany receding from the agreement, there would be a place for the gold to go to, and there it would go at once. The result, therefore, is that you place yourselves in a position which depends on a universal agreement, and if one or two of the parties to it withdraw, the whole of your reserve of gold at once goes to them. I protest against making the commercial interests and the financial system of England dependent on an international agreement. It never has been so, and we cannot safely make it so now. The condemnation of the bi-metallic theory is that international agreement is, from the bi-metallists' point of view, absolutely indispensable and necessary to their system. The financial system of England has stood upon its own basis and has not been dependent on international agreement, on the permanence and stability of which no reliance can be placed. You will never get stability in international arrangements. In old days you had the balance of power, which depended on international agreement. How long was it before the Treaties were broken, and then what became of the balance of power? Very much the same fate would overtake you with regard to the balance of metals. I do not understand why, if silver is to be declared by Act of Parliament or International Statute to be of the same value as gold for all the purposes which have been indicated, we should have any gold at all. It seems to me that, if the two metals are to be declared to be of equal value, gold may as well disappear. I remember, during the brief period I was at the Exchequer, that I had the opportunity of talking with Sir Stafford Northcote, and I never shall forget the quiet, humorous contempt with which ho treated the subject. He said—"If it be true that you can settle the value of anything by international Statute, why should we have either silver or gold at all? Why not have an international agreement, to the effect that all transactions should be done with leather, as in ancient times?" Why have we had this theory propounded for the revival of prosperity? Men of business want to pay their debts in an appreciated currency; and one of the reasons why I oppose this system is because I am not prepared to raise prices either by Act of Parliament or by international agreement. Unfortunately, I belong to the consuming class: I am not an enemy of low prices: I experience the benefit of them, and I value the low prices of commodities. We are told there is no question that the great disaster which has befallen the world is owing to low prices. But this is not the first time that we have heard this. It is not since bi-metallism was abandoned by the Latin Union that the waves of low prices have appeared. I was reading the other day an instructive book by my friend Mr. Spencer Walpole, in which the author gives an account of the prices in 1820, and the commercial disasters which took place at that time. Exactly the same remedies were proposed then. The first thing which the people who suffer from low prices say is, "Let us tamper with the currency;" and no doubt periods of considerable distress will always induce people to seek strange revenue. That is the reason, no doubt, why these remedies have become more or less popular now. Take the case of India. I am not at all surprised that in Lancashire and elsewhere there should be a certain jealousy at the increase of native Indian production, and I do not complain that those who suffer should complain. But I do complain of the language used on this subject by the Government of India. The Government of India, in the despatches which I have seen, have treated this question as if it was one solely of exchange upon the salaries of Anglo-Indians. ["No."] I have seen appeals to the Protectionist prejudices which are supposed to exist among the English producers; but there is a class of people which the Indian Government might have some consideration for, and that is the native population of India, who are the producers of these commodities. During the short time I was at the Exchequer I wrote a despatch in answer to one from the Indian Government on this question of bi-metallism. The First Lord of the Treasury has hit the nail on the head when he asks, "What is your ratio going to be?" If this theory is true, it may be anything you like. If the philosophical theory is correct, you may declare to-morrow that the value of silver is equal to that of gold. If, when the market value is 1 to 20, you can say it shall be 1 to 15, why should you not say it is 1 to 10, or 1 to 5, or 1 to 1? As the First Lord of the Treasury has said, the great inducement to countries to hold large stocks of silver is the hope that the ratio will be restored to 1 to 15. Now, it is said, "Let us put it at 1 to 20," or at whatever the market price may be. That is exactly what is done on board ship. A man takes an observation of the height of the sun to ascertain when it is 12 o'clock. He reports to the captain that it is 12 o'clock, and the captain says, "Well, make it so." If you had the power of Joshua you might be true bi-metallists. If you are going to take the existing ratio, then your proceedings are totally unnecessary; but if you are going to take something different from the market ratio, then you are going to disturb the whole commercial relations of the world. You cannot get out of that difficulty, which lies really at the bottom of the whole thing. I do not think it is at all a question which depends upon scientific disquisitions. I observe that upon the Royal Commission the men who have practical dealings with money were the men who pronounced against the bi-metallic theory. As far as I know, the principal authorities of the City of London conversant with dealings in money have condemned this experiment. When you are comparing our situation with that of other countries, you must remember that, in proportion to the greatness of our wealth and population, our wealth and prosperity depend in a far greater degree on foreign trade than do those of any other country in the world. The internal trade of America, Germany, and France is of much more importance than the foreign trade of those countries; but it is not so in the case of England. I believe the mono-metallic system which we have adopted is a sound system. It is the system under which we have prospered, and in which we have been followed by the other nations of Europe in very recent times. With Pitt, in that famous sentence of his, we may say of our financial system that "we have saved ourselves by our firmness, and Europe by our example." The nations of Europe have been disposed to follow the principles which have led to the great prosperity which has placed England upon a, commercial pinnacle. I confess I should see any departure from that system with the greatest alarm. Occupying the position we do in the commerce of the world, I do not see how we are to go round to the nations of the world and enter into a sort of Dutch auction with them, in which we are to fix the ratio. Are we to go to one country and ask them what they want, and to another country and ask them what they want? Is it possible you are going to place the commerce of England in such a position as that? I will not say that that would be a most undignified position; but I think it would be a most dangerous one for a great commercial nation like England to occupy. I share with the right hon. Gentleman opposite the sympathy he expressed for the distress which has existed in Lancashire; but, as the right hon. Gentleman said, exports have increased to India, which shows that the relation between the gold of England and the silver of India has not prevented the increase of exports to the latter country. I find that in Lancashire there were in 1870 33,000,000 spindles at work, while in 1885 there were 40,000,000, and that the numbers of power looms in the same years were respectively 440,000 and 506,000. No doubt you might have hoped for, and we should have been glad to see, greater progress than that; but during the whole of that period the advance has been continuous, both as regards power looms and spindles. The same advance appears in the number of persons employed. In 1870 the total number of persons employed was 450,000, as against 504,000 in 1885. That does not look to me like a drooping or a ruined industry. Let us hope, then, as in former times of distress, so it will be now, that the period of distress may pass away, and that we may see, as we have seen before, times of reviving prosperity. Do not let us, after a few years of distress, overthrow that sound financial system which I believe has been the keystone of the prosperity of this great Empire.

*(8.30.) MR. T. H. SIDEBOTTOM (Stalybridge)

I do not often trouble the House with any observations; but, after deep study, I am convinced that this currency question is of such transcendent importance to every one of us, and so vitally affects every man and woman in this country, that I hope the House will allow me to make a few remarks. I was first induced particularly to consider' this subject by the depression which began to make itself seriously and acutely felt in the general trade of the country, especially in the great cotton industry, in the year 1878. I was at that time Member for the large manufacturing constituency I have now the honour to represent; and being also myself an extensive cotton spinner and manufacturer I felt impelled, alike by duty to my constituents and by self-interest, to endeavour without prejudice, and with an entirely open mind, to investigate, and, if possible, find out what really lay at the root of the mischief. And I came then to the deliberate conclusion that our troubles were mainly to be ascribed to the suspension of the coinage of silver in France and the Latin Union, and the consequent fall, fluctuations, and uncertain value of that metal as measured by gold, and to the great appreciation of gold thereby caused. The subject at that time was but little appreciated or understood, and if a man ever mentioned bi-metallism he did so only with bated breath and whispered humbleness. But I entertained such a strong and decided opinion upon it that I ventured to bring the subject under the attention of this House in May, 1879, when, after alluding to the decreasing supply of gold, I stated that it seemed to my mind certain that the great depression throughout the world in nearly every interest and every trade was, to a great extent, due to the contraction of the currency caused by the demonetisation of silver, and the degradation of that metal to a mere commodity, such as iron, or tin, or lead; and, consequently, that the true remedy for our misfortunes—the true, plain, and direct way to revive our waning trade, to arrest the ruinous fall in property, and to bring back general prosperity—was to restore silver to its former position as a partner with gold in the currency of the world. This was more than 10 years ago, and my view has been strongly confirmed by everything which has since occurred. It would ill become me to occupy the time of the House by entering into a long dissertation on the details of this silver, or, rather, gold and silver question; every Member has had a copy of the final Report of the Royal Commission. The arguments on both sides are stated in this Report with perfect fairness, and considered, criticised, and dissected with consummate ability; and I venture to say that a more able and exhaustive treatise on the subject was never written. I have read it every word, and earnestly commend its perusal and study to every man who wishes to thoroughly grasp and comprehend the subject. He cannot then fail to form a clear conception of the evils brought upon us by the fundamental changes which have of late years taken place in our currency conditions, and will, I am sure, agree that the thanks of the country are owing to every member of that Commission. But whilst abstaining from entering into details, I hope the House will permit me briefly to consider a few of the aspects of this great question. From 1803 to 1873 the Mint of France was ready to convert into coin all silver brought to it, such coin being legal tender at a fixed ratio with gold of l5½ to I; and in the States forming the Latin Union a similar law was in force from 1865 to 1873, the fixed ratio being also the same, that is, 15½ ounces of silver to 1 ounce of gold; therefore, no person possessing silver would, of course, part with it for less. This ratio virtually controlled the market, and, as a matter of fact, for the first 70 years of this century the extreme variation in the market value scarcely exceeded 3 per cent. in either direction; but in consequence of the large amount of silver coined in 1873, owing to the monetary changes in Germany, a Convention was entered into in January, 1874, between France and the States of the Latin Union, limiting the coinage; and the consequence was that silver went down in value from about 60d. per ounce to a little over 42d. or over 28 per cent.; and though it has now somewhat recovered, in consequence of the anticipated legislation in America, no one may say how much lower it is still destined to fall. I beg the House specially to note this fact. From the beginning of the century till 1873 the gold price of silver practically never varied, although the variations in the relative production of gold and silver were far greater during that period than they have been since or are ever likely to be again; but the marked divergence in value of the two metals only occurred when the free coinage of silver by the Mints of Europe ceased, but then began immediately. It must also be remembered in this con- nection that the precious metals do not perish as other commodities perish. Their aggregate accumulation in use at present is estimated at £1,900,000,000 of silver and £1,500,000,000 of gold; consequently a variation in their annual production constitutes merely a fractional difference of the whole. Concurrently also with France and the Latin Union closing their Mints to silver, there has been a tremendous falling off in the gold production of the world, just when a much larger quantity was required, and the result has naturally been a very great appreciation of gold. Previous to the discovery of the gold mines of California and Australia, the annual production of gold in the world was about £6,000,000; but these discoveries increased the supply six - fold, to £35,000,000 or £36,000,000, and the consequence was great and general prosperity, not to say inflation. It has now fallen, however, to under £20,000,000, whilst at the same time Germany has recently introduced a gold currency of £80,000,000, the United States have resumed specie payments requiring £100,000,000, Italy £20,000,000 for a like purpose, and £4,000,000 have gone annually to India; and the Mints of Europe having been also at this most inopportune moment closed to silver nearly half the money supply of the world has been cut off, and we have seen the natural effect in the decreased value of commodities and the heavy fall in property. But, with the permission of the House, I will endeavour to show a little more in detail the disastrous consequences which have resulted from this state of things, from this dislocation of silver and gold, and then indicate what seems to me the obvious remedy and the only course calculated to rescue our commerce from the ruin with which it is threatened. As has been well stated by the hon. Member for Flintshire, the total fixed charges payable out of the industry of the country are estimated at from £150,000,000 to £200,000,000 a year. Now as this is a permanent and fixed load, and gold is the scale by which the wealth of the country is measured, it is evident that if gold becomes dearer, if it appreciates, as it has done since the free coinage of silver was suspended in 1873, this tremendous load becomes greater and presses more heavily on the productive resources of the country. The appreciation of gold and the great fall in prices have, in fact, transferred about 10 per cent. of the wealth of the country to the money-lending and annuitant class, made a small class of rich people still richer, but robbed the hard working, toiling, industrious class for the benefit of those who toil not neither do they spin. It seems to me that both my right hon. Friend the First Lord of the Treasury and also the hon. Gentleman opposite are labouring under some confusion of ideas; because our belief and contention is that, under a system of bi-metallism, it would make no difference whatever whether debts were paid in gold or silver, for the two metals would have a relative fixed value to each other, and be mutually interchangeable at that value. No doubt contracts ought to be held sacred; but the right hon. Gentleman and others will not, I hope, forget that many contracts have been made under practically the same circumstances and conditions as those we wish to restore; and surely some sympathy (Might to be spared for the unfortunate debtors who, during all these long years, have, as a matter of fact, been paying about one-third more than they expected or virtually contracted to pay. I entreat the House to consider, for a moment, the intolerable hardship which, quite unwittingly and without the least design or intention, has been inflicted on debtors and upon everyone who has charges of any description to pay. The debts and charges have been incurred under totally different conditions to those now existing, and when an entirely different state of things prevailed. The stupendous changes which have taken place in our monetary arrangements have been quite unforseen and unexpected, and, of course, without the knowledge or assent of the unfortunate debtors; and yet there is but too much reason to fear that, in consequence of these changes, there is no prospect but absolute irretrievable ruin for many of these unfortunate persons. It is all very well to moralise and say people must take the consequences of their acts; that the laws of political economy must not be interfered with; the property and wealth and land of the country must change hands, and all the rest of it; but I think the House will be of opinion that if, without injury to anyone, something can be done to remedy or mitigate the injustice, and to bring back and restore the same conditions as approximately prevailed at the time the unfortunate debtors contracted their obligations, any legislation to accomplish this, however imperfectly, will be only equalled in its beneficence by its wisdom and justice. But I should like, with the permission of the House, to consider how and in what way our industries in this country are particularly affected, and also briefly to glance at the hardships and injury inflicted upon India. The two largest industries in this country are agriculture and the cotton trade. Much of the cotton trade is with India, or other silver using countries. In one portion of our own Empire, England, gold is the standard; in another portion, India, silver; and the difficulty of carrying on any satisfactory trade between the two under such conditions is very great indeed. There can be no doubt (as is stated in the Report) that an unstable and fluctuating exchange between gold and silver has tended to foster trade between countries having the same standard to the prejudice of those having a different standard; and English manufacturers have, in fact, had practically to pay the whole loss in the exchange by taking less price for their goods. It may be said—and this was, indeed, the argument of my right hon. Friend the leader of the House—how can this be so, with the large and increasing export of cotton goods to India? But the large exports are no proof to the contrary, for the production of Lancashire goods is so enormous, owing chiefly to the abuse of the Limited Liabilty Law, that they must go somewhere or our people starve, and they have long been sent to such markets as would consume them irrespective of cost, and in many cases at a continuous loss. The Indian trade has increased in spite of the difficulties in exchange owing to other causes; it has received a great impetus from the development of railways, the removal of the Import Duties, and similar matters; and at this moment it would doubtless have been far greater still if the exchange had remained steady, for it will be observed the same expansion of exports has not taken place with China, which is also a silver-using country, but where there has not been the same internal development. A few years ago, the Import Duties which were levied in India on cotton goods were felt to be an injury to Lancashire. Both employers and employed united against them, and they were happily abolished. They amounted to 5 per cent.; but the present state of the silver question, and the great fall in exchange, practically imposes a differential duty of nearly 30 per cent. upon Lancashire goods, as compared with goods manufactured in India,. For example, if I, as an English manufacturer, send a piece of cloth to India for which to cover cost, I must receive back 10s.; and the Indian buyer pays, and has been in the habit of paying, 10s. for it, or in his money five rupees. When the exchange was at par, and the rupee worth 2s., I received my 10s.; but prices in India being about the same, and every single rupee there retaining the same purchasing power as before, the Indian buyer cannot afford to pay more than five rupees as at first, when the Exchange has fallen to 1s. 4d., which means (is. 8d. for me instead of 10s. It would be indeed surprising if anyone possessing the hard head with which Lancashire men are generally credited could entertain the remotest doubt that if '3s. 4d. more was received for every piece of cloth sold at 10s. everyone in Lancashire would be proportionately benefited, for operatives, employers, agents, and merchants would have so much the more to divide amongst them. It may be argued that there really would not be this difference, because if the loss on the exchange was less the Indian buyer would then pay fewer rupees for the goods. Well, it is conceivable that the Indian buyer might secure a portion of the benefit; but even then, if he succeeded in obtaining his goods at a lower price, English manufacturers would be still benefited, because there would be an extended demand for our production as the rupee price was lowered, whilst it would be a distinct advantage to the consumer in India. But it may be said, why not invest the rupees paid for our goods in Indian produce and so recover with one hand what we lose with the other. Well, this may possibly be done by a few wealthy merchants who are prepared for such transactions; but it is not merchants who bear the loss, because, naturally, before purchasing and sending goods to India, or any other silver using country, a merchant ascertains and calculates how much he can realise home, and will only purchase the goods accordingly, and the greater the loss on the exchange the less he will pay; so that the real losers are English spinners and manufacturers, who are compelled to work their mills at any cost for the sake of keeping their people together, keeping down their very large fixed expenses, and finding employment for the manufacturing population of the country. It appears, therefore, that the loss in exchange amounts to a differential duty of about 30 per cent. in favour of the Indian manufacturer. He has already other advantages, owing to his geographical position, the low rate of wages paid, and the being allowed to work almost unlimited hours, whilst we in England are restricted to 56 hours; but these advantages, great as they are, are by no means equal to the other, and cannot explain the enormous increase which has taken place in Indian mills, because this increase has only occurred since the fall in the exchange became so pronounced, and when, as a matter of fact, the geographical advantage was lessened owing to the fall in freights. But that the English manufacturer has a real, tangible, and decided advantage is proved by the hard fact that the exports of cotton yarn from India to China, Hong Kong, and Japan during the last six or seven years have increased between 300,000,0001bs. and 400,000,0001bs., whilst the exports from England have decreased more than 30,000,0001bs. The natural consequence is that cotton mills are being erected on a colossal scale in India to the displacement of English mills and English labour; whilst one of the few industries in this country which seems to be in a really prosperous and healthy condition is that of machine making for filling Indian mills. I will not occupy the time of the House with enlarging upon the effects of these currency changes on British agriculture. No doubt the present disastrous state of that greatest of all our industries is owing to a combination and a variety of causes—virgin soils, railways, fast ocean steamers, and low freights, have brought heavily taxed land in this country into direct competition with the vast prairies of the Western World—but over and above and in addition to all these causes British agriculture has suffered most severely from this currency mischief. It is admitted by every one, except my hon. Friend the Member for Oldham (Mr. James Maclean) (at all events, the 12 Royal Commissionersare unanimous in saying so), that the purchasing power of the rupee in India is as great as ever; therefore, with the Indian exchange, about 1s. 4d., every British sovereign is worth really 15 rupees instead of 10; and the purchasing power of each single rupee being in India as great as ever, each one of them will purchase as much wheat in India as ever, consequently the buyer gets 15 rupees' worth of Indian wheat for a sovereign, instead of 10, or about half as much again as formerly. Comment on the above facts is needless; he who runs may read the principal cause which lies at the root of the depression in British agriculture, and may also with confidence predict what will be its fate in the not distant future unless something is done. Then, again, let us examine for a moment what is the effect upon India, and the taxpayers there, of the present state of affairs. As bearing on this point the opinion of the six Commissioners, who hesitate to adopt bi-metallism, is important. They say, in the Report, that— The exceptional position of India causes it to be affected in an especial manner. Whilst its taxes are collected in silver a substantial portion of its outgoings, including the very heavy payments which have to he made in this country, are necessarily disbursed in gold. And they have no hesitation in expressing the conclusion that the changes in the relative value of the precious metals are causing important evils and inconvenience to the Government of India. In other words, the Government of India owe in gold and collect the taxes in silver. Consequently, for every 16d. sent to England in payment of her debt, India, with the exchange at 16d., has to collect nearly 2s. Well, indeed, may we hear such disastrous accounts of the grinding taxation in India, and of the difficulty experienced by Indian statesmen in making receipts meet expenditures. A monstrous hardship and injustice is also inflicted upon retired officers, gentlemen of the Civil Service, and others, who having spent the best years of their lives in the service of their country in India, and returned home at last to end their days in their native land, find themselves mulcted of about one-third of their incomes from no fault, but simply from this currency disturbance. I would remind the House also that there is no security whatever that we have reached the bottom of the abyss, or that a further fall in silver may not any day be experienced, and a further discrepancy be established between the standard in India and the standard in England. Well, what is the remedy? I have already quoted part of the opinion of the six Commissioners who hesitate to adopt bi-metallism. These same gentlemen go on to say that— No measure has been suggested that claims to be anything like so complete and thorough a remedy as the adoption of bimetallism; and that in any conditions fairly to be contemplated in the future, so far as they can forecast them from the experience of the past, a stable ratio might be maintained if bi-metallism were accepted and strictly adhered to. I think the House will consider this pretty strong language as expressing the opinion of the six Commissioners who are supposed to be against bi-metallism, and it is extremely valuable as an answer to those who are making capital out of their supposed opposition. These six most able gentlemen, after hearing the evidence, after long consideration and study, and under deep responsibility, state their deliberate opinion that no remedy is so direct or effectual as bimetallism, and think it would keep the value of silver uniform as compared with gold. Why, then, do they not take the plunge, and unite with their six remaining colleagues in recommending its prompt and early adoption! I can discover no reason except anxiety to avoid doing mischief, and groundless and chimerical apprehensions. Pausing, as it were, on the brink of a dark and unknown stream, they seem to ask themselves whither its broken and tempestuous waters lead, and shrink with halting tread from trusting themselves to its swift and foaming waves. I think, however, they have, in fact, admitted the whole case, and proved that the real, direct, true, and only remedy is that suggested by the other six Commissioners, namely, the assembling of an International Conference, with the view of establishing bi-metallism, that is, some fixed ratio between silver and gold. I do not wish to dogmatise, or to say what that ratio should be; it is essentially a matter for discussions, and for the consideration of any International Conference which may be appointed. There are many and strong arguments in favour of fixing it at the present value, of about 20 or 22 to 1, and others for the old ratio of 15½ to I. Bat what I earnestly wish to press upon the attention of the House is that something should be done; that we should make some effort to remedy the present evils. Bi-metallism is nothing new: it existed in France for the whole of this century. Up to 1873 its effects were felt in all countries; and it is most significant that there should have been such unexampled depression in every industry simultaneously with the system coming to an end. We must expect strong, and powerful, and persistent opposition, particularly from the great financial houses, who own the gold, and want to retain it at its present value. But, after all, Magna est Veritas, et prœvalebit. And I cannot believe that the people of this country will allow our industries to continue so heavily handicapped; but, in the long run, the interests of the many will prevail. England will join such a Conference as that we suggested, to thoroughly discuss and ventilate this great subject. and the collective wisdom of nations will devise a remedy, and fix a ratio of exchange between silver and gold which shall ensure stability, prevent violent fluctuations, and do something to restore prosperity to the long-suffering industries of the world.

*(9.17.) MR. HOYLE (Lancashire, S.E., Heywood)

Mr. Speaker, I may perhaps be permitted to draw attention to the Amendment before the House— That, in the opinion of this House, the evils which have resulted from the divergence in the relative value of silver and gold following the monetary changes which took place in Europe in 1873, can best be dealt with by a Conference of the chief commercial nations of the world, called to consider whether a bimetallic system can be re-established by international agreement in the interests of all the nations concerned. That does not go so far as the Report of the Royal Commission, signed by my right hon. Friend the Member for the London University, that a bi-metallic system can be established. I believe that this is what the Commissioners agreed to, that in any conditions fairly to be contemplated, so far as we can forecast them from experience of the past, a suitable ratio might be maintained.

*SIR J. LUBBOCK (London University)

I am sure my hon. Friend does not wish to misrepresent me. I have already pointed out, in the course of the debate, that Mr. Birch and I dissented from that opinion.

MR. HOYLE

In that case the Blue Book has been misprinted. I find Sir John Lubbock's name appended to the Report, and also that of Mr. J. W. Birch, ex-Governor of the Bank of England. It is quite true that these two gentlemen did add a foot note: — No doubt the adhesion of England, Germany, and the United States would be of very important additional strength, and we do not deny that such combination might for a considerable time be able to maintain the ratio adopted. Having regard, however, to the great uncertainty as to the probable future production of the mines, and to the use of the precious metals in the arts of a number of countries which would still remain outside the combination, we doubt whether any given ratio can be found maintainable. It seems to me that foot note shows an uncertain condition of mind which is hardly worthy of my right hon. Friend.

SIR J. LUBBOCK

May I just explain? It is usual, if you agree with the bulk of a Report, to sign it stating the points on which you differ. There was no hesitation on my part, or on that of my friend Mr. Birch.

*MR. HOYLE

I acquit my right hon. Friend of all blame, and accept his explanation. Before we can understand the evils to which the Motion refers, we must consider the condition of things that prevailed before the "divergence" took place. It is, of course, well-known to the House that, previous to 1873, this country enjoyed great prosperity. Industry and commerce flourished, and the National Revenue went up by "leaps and bounds." The summit of that prosperity was reached in 1874, concurrently with great alterations on the Continent of Europe in the currency. The decline of prosperity affected all trades; and agriculture has suffered severely during the last 16 years. I hope hon. Members acquainted with agriculture will tell us whether farms have been un let and unlettable, whether fields have remained unfilled, and whether land has tumbled down to grass and weeds; whether farmers, gathering up their little possessions and taking what remained of their property, have gone, with their trained skill, to other lands; and whether labourers, biding for a time, have finally gone to the large towns and seaports to swell the ranks of casual and unskilled labour? But perhaps I may speak of the staple industry of the county from which I come — Lancashire. Before 1873, merchants, in exporting Manchester goods, either sent them out in the grey state, or had them bleached, dyed, or printed, according to circumstances. In most cases a bill was drawn against the shipment which put the shipper into funds, but it was only when the goods were sold abroad, and the proceeds remitted home to close the transaction, that the merchant and those who joined him in the venture were able to count up their gains. When silver fell and the rate of exchange dropped the merchants could not carry on that mode of doing business because of the losses entailed. Either manufacturers must consign the goods themselves, or their correspondents in foreign countries must send orders at a fixed and certain price. Native indents, as they are called, that is, orders to buy goods laid down in India or China, in stated months, became the rule. A merchant receiving such an order first ascertained at what rate a banker would undertake to fix exchange six or nine months ahead. He then reckoned freight, brokerage, commissions, and other charges, and, after deducting all these from the silver price offered, the balance left was all that could be bid to the manufacturer as the price for the goods. The method of doing business was completely revolutionised. The rate of exchange became the dominating factor. An East India merchant, whose principal business is that of exporting cotton from India to various European countries, in giving evidence to the Commission, fully detailed the features of the old and new systems of conducting that business, and gave illustrations of the rise and fall in prices owing to oscillations in the rate of exchange. The following questions were put to him from the Chair:—

"What I want to know is whether the rapid alteration in the value of cotton in India due to the exchange is or is not pernicious to the trade?—It rose rapidly before August in conse- quence of one alteration in the exchange; it fell rapidly after August in consequence of another alteration in the exchange. Is not that a great inconvenience to the grower in India?"— Well, of course to the grower fluctuations are to that extent unpleasant. For the exporter it practically makes no difference. We have only to wait a little till prices adjust themselves. You simply work the machine by which the cotton is transferred from the grower in India to the buyer in England?—Certainly…. You have just explained that the machine is practically so perfect that you receive no violent shock from even the most violent oscillations in exchange. What I want to know is whether these violent oscillations do not do harm to the grower, to the man who is not part of the mere machinery of transfer, but the man who produced the goods?—Well, of course if the price of silver rises rapidly the grower does not like it. If we have a fall in silver and are able to offer him 10 or 15 per cent. more for his produce he likes it very much. It is in your power, directly you see that operations are not going to yield a profit, to stop operations?—Certainly… Now, what struck me as very remarkable in that evidence was that the witness was apparently quite unconscious of the startling character of his evidence. The swing of the exchange pendulum, owing to rises and falls in silver, made a difference in the selling price of commodities of 15 per cent. first on one side, and then 15 per cent. on the other. The skinning of eels is unpleasant to the eels, but to the man who holds the knife it makes no difference— he need not cut his own finger; it is his own fault if he does. The House will see that this witness proves beyond a doubt that commodities rise or fall in value as the rate of exchange goes up or down. If there were any doubt, however, it would be dispelled by the testimony of another witness—a shipper of manufactured goods from this country to India. He said, in answer to a question put to him— Any one acquainted with the Manchester Market can testify that business there is always checked when a fall in silver takes place, and that Manchester prices have generally ultimately to give way. But the one person that cannot save himself is the manufacturer?—He is the worst on the whole. The merchant can save himself, but the manufacturer cannot?—Yes. As exchange fell there was always a diminished amount left for the English manufacturer? The "machine" was perfect. "The merchant," it was expressly said in evidence, "need take no risk unless he liked." The loss was bound to fall on the producers. The "machine" stops until, to use the euphemism employed by one of the witnesses, "prices had adjusted themselves," which means that until commodities had fallen in price equal to the fall in silver. But while this evil was in development, others were in progress. The depression in the agricultural districts at home lessened the demand for cotton goods, and falling prices automatically raised the barriers to trade in Protectionist countries, in this way—a fixed duty of 2s. 6d. on an article that formerly cost 10s. was 25 per cent., but when the article fell to 7s. 6d., the duty became 33 per cent.; and if it fell to 5s., the duty was then 50 per cent. Diminished demand from the United Kingdom and an aggravation of Protection shut Lancashire out of the markets, previously supplied; and so arose the cry for "new markets." The home trade could not absorb its usual quantity of goods; Protectionist countries were closed by the automatic rise in the proportion of duty; but India and China were open at a price, they could take unlimited quantities of cotton fabrics, so that the production was more and more poured into Eastern markets. That increased supply compelled English producers to accept silver prices. In addition to those adverse circumstances it began to be perceived that cotton spinning and manufacturing could be carried on in the East without loss by exchange. The greater the fall in the exchangeable value of the rupee, the greater the inducement to cut out English made goods, and thus an expansion of spinning and weaving occurred in India, such as has never been paralleled in any industry requiring technical skill. The profits made in Indian cotton mills are so large that they work on Sundays as well as week days. Some of them run 84 hours a week, and the average is a little over 80 hours a week, as against 56½ hours in this country. Rich English capitalists and rich Indian capitalists are adding to their wealth by these means. Let me say that I believe it would be difficult, if not impossible, to find a man in Lancashire who would lift a finger against the prosperity of India or retard the welfare of her people. If India has geographical or any other advantages she is entitled to make the most of them, and it is clearly our duty to assist her in making the most of them. The welfare of India and the bettering of the condition of her people are British interests. In reference to the cotton industry in India, the Royal Commissioners say— Estimates have been laid before us which tend to show that the Indian manufacturer, if unassisted by exchange considerations, would be unable to compete with the English manufacturer successfully in any market. The technical character of the questions involved in these calculations makes it very difficult to pronounce an opinion on the subject, but we understand that a Committee of the Manchester Chamber of Commerce has been carefully considering the question, and that their conclusions, which, on such a point, will have a special value, will shortly be made public. The following is a copy of the Resolution of the Manchester Chamber of Commerce requesting the Board to undertake the inquiry referred to by the Royal Commissioners— That in view of the recent very rapid increase of cotton spinning in India and the exports of yarn therefrom, more especially to China and Japan, while at the same time there has been a very serious check to the growth of Lancashire yarn exports to those countries, the directors be requested to examine and report to a special meeting of the Chamber as to the causes and circumstances which have thus enabled Bombay spinners to supersede those of Lancashire. That inquiry extended over 10 months, and the most competent men in the different branches of the trade were invited to give evidence. In such an investigation, conducted by laymen, great scope was, as is usual, given to witnesses. There was a good deal of theory, of opinion, and of argument which were entitled to great respect, even when they failed to carry conviction; but when the witnesses detailed their daily experiences, and gave facts within their own knowledge, their testimony was absolutely unimpeachable. A witness who has, perhaps, sold more cotton yarn than any man living, said— The great factor which has comparatively taken away an important section of our trade is the fall in exchange. It is utterly impossible, with the silver price of exchange, for the Lancashire man, when his money is reduced 25 per cent., in exchanging from silver to gold, to rival the Bombay man, his competitor, whose money is not reduced in value. And the witness went on to say— The demand never stopped in the spring of 1887, although we were unable to take orders during the months of March and April, and until the third week in May, when we accepted a reduction in price equivalent to the fall in exchange. The "machine" does its work so effectually that prices must go down in Manchester. The mills may stop, of course, and that is the alternative. So large are the quantities of goods sold to silver-using countries that prices all round are lowered. There cannot be two prices for the same article—one for gold-using countries and another for silver-using countries. If any one demand, either home or foreign, yields better Returns than another, there is an immediate increase of supply, with a corresponding decrease of supply to those markets giving less favourable results, and thus a level of prices all round is quickly reached. The Board of the Manchester Chamber concluded its inquiry, but, not being agreed, two Reports were prepared. A copy of the evidence taken and copies of the two Reports were sent to each member of the Chambar, and a special meeting was called to consider the Reports. After full discussion, the Chamber adopted the Report, which said that— The principal cause which has enabled Bombay spinners to supersede those of Lancashire in exporting yarn to China and Japan is the great fall in Eastern exchange since 1373. Therefore, the Manchester Chamber of Commerce, being largely expert, after an exhaustive inquiry extending over 10 months, decided that conflicting currency laws in the same Empire were giving a bonus for the transfer of a great industry of that Empire from one part of its dominion to another. Another evil arising out of the divergence between gold and silver is the lowering of the quality of English goods. It is rare to find now any make of cotton goods that has retained the character it had 20 years ago. Mr. Stephen Williamson, M.P., told the Royal Commission that merchants did not wish to ship inferior goods, but he said the people in silver-using countries had small silver coins in common use, and when the exchangeable value of these coins fell there must, of necessity, be a lower article supplied. On this point an East India merchant, who was a witness at the inquiry in Manchester, was most explicit, He said— We find it difficult, and, indeed, often impossible, to raise prices. The general experience is that when exchange falls the Indian buyer reduces his sterling price to us here, and we have naturally to offer a lower price to our producer. If exchange falls, say, from 1s. 5d. to 1s. 4d., which is a fall of 6 per cent., the native buyer reduces his price to us accordingly, and it is needless to say that we cannot execute such an order. Possibly several telegrams pass between us, entailing expense, and the transaction may possibly be ultimately arranged by a pick or two picks being taken out of the cloth, or a narrower width being taken, or a yard or more being taken off the length; and at the same time the maker may have to cut into his profit, and the agent into his commission, all in order that an article may be supplied to come in at the current rupee price. Some shippers, less scrupulous than others, may stamp the goods the original length, though possibly a yard has been taken off them, and in this way false stamping has been encouraged. You don't think it is the fall in Exchange that brings this about?—I have said that it is the fall in Exchange that creates the difficulty, and this is how the difficulty is frequently overcome. Another way of cheapening cost is loading the yarn with size containing china, clay, and chemicals. Formerly it was considered that about 20 per cent. of size was sufficient to give strength to the yarn in weaving. One day, on my way to business, I was joined by a manufacturer, who complained bitterly of the unremuncrative state of trade. I said to him — You size heavily, I believe?—Oh, no, he said. We only put 100 per cent. on, and some of our neighbours put 200 per cent. on. So that 100 lbs. of cotton yarn is loaded with 200 lbs of filling, which must fall off in the washtub, leaving the web as thin as paper and as easily torn. Heavy sizing compels the saturation of weaving factories with steam to soften the yarn and make it weave. The operatives complained that their health was being destroyed, and last year they had a Bill drafted in the hope that Parliament would remedy the evil. Eventually, a Conference was held in the Grand Committee Room to eonsider the draft Bill— a Conference consisting of seven Members of Parliament and equal numbers of representatives of the operatives and of the employers. In the discussion that took place the difficulties of the position on both sides were pointed out. One of the speakers on the part of the employers said the trade now was such that "a manufacturer could not live if lie made honest cloth." The changed condition in which the trade is carried on will be seen if I read what a Manchester merchant said before the Manchester Chamber. He was asked— If a Manchester merchant sells yarn in China for 500 dollars, and a Bombay merchant also sells yarn for 500 dollars, quantity and quality being equal in both cases, what loss does the Manchester merchant sustain in getting his money home? And the reply was "None." Do you mean that the Manchester merchant will get the same money home as does the Bombay merchant?"—Assuming, without entering into calculations, that those 500 dollars return to the Lancashire merchant £75, whereas they formerly returned him £100, and that those £75 will purchase him as many commodities as £100 did formerly, he would lose nothing. The question was put in another form and the witness answered in these words:— Take the case of my own trade. I am a merchant carrying on business in -Bombay and Manchester, and X am to-day doing the very business which you instance, because I am shipping yarns and cloth from Bombay to China and Japan, and also from Manchester to the same markets. In the latter case I get 25 per cent. less gold for the same quantity of yarn than I formerly did, say £75 instead of £100; but that lessened quantity of gold will buy me as many commodities as the £100 would in former days. At the same time, in Bombay I get back my money in rupees, say 1,000, the same number that I got in former days; but these rupees will only buy me the same commodities that they did in former days. Therefore the purchasing power of the two remittances is equal, for I get as much of all that I consume and require, as a merchant, for my appreciated gold—that is, for the smaller number of sovereigns at home—as I do in Bombay for the unaltered number of rupees. I consequently sustain no loss as a merchant on my remittance from China. That evidence is lucidity itself—it is a volume in few words—the merchant, the middleman suffers no loss—it is passed on to the English producer. The Bombay manufacturer carries on his trade in circumstances analagous to those which prevailed in this country before 1873, but the English manufacturer is worse off by the loss of 25 per cent in exchange. Why does not the English manufacturer pass the loss on? Well, part of it was passed on. Coals and mill stores were cheaper. Cotton, too, was lower and wages were reduced. The last thing an employer likes to do is to reduce wages. Ill-feeling always follows the attempt. Some years ago Bolton, Blackburn, and other places in East Lancashire suffered from an embittered struggle on a reduction of wages. An excited mob broke into the house of Colonel Raynsford Jackson, who was the President of the Manufacturers' Association, and burned his house to the ground. In that struggle the operatives on strike, or locked out, lost in wages nearly £790,000 before the strike ended, and then they went in at the reduction. At no period during the last 15 years have reductions in cost of manufacture been equal to the fall in values of cotton goods, and now the lessened costs of manufacture have, in great part, passed away. Coals have risen, wages have risen, cotton is higher, because it can be and is consumed in other countries where exchange troubles do not exist. Another evil from the divergence between gold money and silver money is that the inception of business is transferred to foreign markets, and necessitates long contracts. A witness at the Royal Commission was asked— Question 2283.—Is it the case that this fluctuation in exchange loads to bargains being made on contract for future delivery rather than to immediate transactions?—Yes, it has changed the whole nature of business. Question 2284.—And these contracts are fulfilled after a certain time, and during that time accidents may occur?—Yes, formerly the man who sent the goods abroad was really a merchant. Question 2285.—He is now simply a middleman?—Re is now a middleman and tries to keep himself in that position. Mr. Provand, M.P., describing before the Royal Commission the cost, the uncertainties, and risks of the new mode of doing business, said: "It makes it a speculative gambling business in fact." The long contracts for yarns and piece goods necessitated by the new system lead to gambling in raw cotton. Speculators can afford to pay, and do pay, well for early information. No sooner are contracts placed in Manchester than speculators put their hands on raw cotton; the shipping merchant may also buy cotton simultaneously with his purchases of yarns and goods; for him, with accurate knowledge of contracts placed, it is a safe speculation. So the spinner or manufacturer may find there are three buyers of raw cotton against one transaction in the manufactured article. In that way "cotton corners" are made. Mr. Henry Lee, formerly M.P. for Southhampton, and now President of the Manchester Chamber of Commerce, in his review of the trade of 1889 at the annual meeting of the Chamber in February of this year, said— He believed the manufacturers of the present day were not obtaining what they had a right to expect from the capital they had invested. The wages paid were considerable, but the amount of profit arising from the investment of capital was not large. This was due to several causes… There was gambling in shares, gambling in Stocks, gambling in cotton, gambling in almost everything that could be touched. He quite remembered the time, when he was young, when those things did not exist, and their forefathers would have been horrified at the spirit of speculation which prevailed at the present day. These are only part of the evils to which this Motion calls the attention of the House. There is no country in the world where the cotton trade is carried on under such unfavourable economic conditions as exist in this country. In all other countries the investment of capital is encouraged. In this country such investment of capital is discouraged by the conflict of monetary laws in the same Empire. There is no other country where the returns for capital and labour employed in the cotton trade are so uncertain as they are in England. We are told we want Protection. What is the meaning of the word "Protection" when used in relation to trade and commerce? It means a tax laid on an article at the port of entry which shall make it difficult for foreigners to compete with home producers. Arbitrary and artificial interference with the sale of commodities affect prices far beyond what the actual amount of interference would seem to warrant. The article of foreign origin being taxed at the port of entry home producers get higher prices, not only by the amount of the tax, but also from the lessened supply. The whole community gives up part of its earnings to increase the income of a section. That is Protection. What is happening to the cotton trade at this moment? Take the case of sales in China of Indian goods for 500 dollars, and of English goods for a like sum, as published in the Manchester evidence. China is a neutral market—open to all on equal terms, and the China merchant has paid equal amounts. The Bombay man gets his money home in full weight and count, but the Manchester man loses 25 per cent. by exchange. Where has the loss gone to? Who has got it? Part of it has been paid to the banker for the risk he has taken in fixing exchange forward. Mr. Provand, M.P., told the Royal Commissioners the bankers' charges on China business were equal to a rate of 12 per cent. per annum for the use of the money, and he had known it to be equal to interest at the rate of 15 and 20 per cent. per annum; but even then the risks and losses were so great that bankers derived only small profits from that class of business. Part of the loss goes in those commissions to bankers, and the remainder of the loss goes in the fall of produce. Falling exchange works both ways—in lowering the price of exports and in lowering the price of imports. Produce to pay for our exports is sold here, and consumed by the whole community. The manufacturer has had 25 per cent. knocked off the value of his goods, and the community has got it. Operatives and their employers have done the work, and the community has got 25 per cent. of their wages. If that had been done of set purpose, we should have given it a hard name. But it is an accident. It came out of the Franco German War. Not one of the actors on either side of that great war had the remotest idea of what was coming. The last thing they intended was to cripple the industries of the world, but grievously crippled they have been. In saying that one portion of the community— and that the toiling portion of the community-—ought not to be robbed of the fruits of their toil, are we Protectionists? Producers are the victims of monetary vivisection. But it is said we are a creditor country. What made us so? The ancient Britons were not creditors of anybody; then, how have we become a creditor country? The inventive faculty possessed by the people of this country, the adaptation of machinery to the varied industries, has so multiplied the power of the individual to produce as to give us the position we hold as the first commercial nation in the world. Improvements in machinery have enabled the same, or a fewer, number of workers to produce more goods of a better quality and at a smaller cost. At the same time, the hours of labour have been lessened, and higher wages earned for fewer hours. That seems strange, and yet it is true. The eight hours' day will come that way, to the advantage of both masters and men. A striking illustration of this great gain took place in the woollen trade. When wool combing was done by hand it was laborious to the workers and injurious to he fibre of the wool; but now, by the aid of the combing machine, invented by Mr. Isaac Holden, M.P., 20 persons can produce more and better combed wool than 2,000 persons could do before. The world has gained more by that invention than if Mr. Holden had discovered a gold mine. Every day's working of a gold mine brings the mine nearer to exhaustion, but every day's working of new inventions of machinery educates the workers and stimulates the mind, which is the mainspring of all production, and so every mechanical invention becomes the parent of others. The inventive faculty in our people is practically with out limit. We owe it to Watt, Arkwright, Hargreaves, Kay, Stephenson, Faraday, Wheatstone, Brunel, Bessemer, Holden, and their coadjutors and successors that we are a creditor nation. These men took the forces of Nature and turned them into beneficent activity for the use of man. The power of this country to produce was never greater than now. That power is growing, and, with technical education in all our towns and villages, will grow. We are a nation of producers. Our power to produce is practically unlimited, but the power of each individual to consume is limited by Nature herself. The improvements in shipbuilding and in the management of ships continually lessen the cost of transport, so that distance from the supply of raw material is of less and less consequence. What we want, above all things, is the free inter change of services with other nations. If we permit impediments to the exchange of services to grow up we shall kill the bird that lays the golden eggs. The world is waiting for what we can supply in such abundance. You may cover China with railways and build iron bridges over her rivers. You may supply a network of iron roads over India. The natural wealth of those countries, released by those appliances, will pay you back in full measure, and almost without stint. It would be hard to say whether they or we would reap most benefit from the exchange of products. Just and equitable means of exchange would enable us to render service to each other. The House was greatly interested yesterday in listening to the Budget speech of the Chancellor of the Exchequer—the Budget for a year of returning prosperity. I hold in my hand a letter from a leader of a Trades Union. The writer is a man of high character; he has received distinguished marks of confidence from successive Governments. And this is what he writes to me in respect to workpeople in the cotton trade in the generally prosperous year of 1889. After careful inquiry by himself and his colleagues, he says— They find that owing to stoppages of machinery and irregularity of employment in the cotton trade last year the operatives lost in wages alone £265,000. The Chancellor of the Exchequer has the administration of a national estate which has no equal in any other country; but give the Chancellor of the Exchequer fair-play. Give agriculture, give iron and steel, and all the industries into which they enter, fair-play; and then the producers of this country could pay off the National Debt without feeling it. What does the Motion of my hon. Friend the Member for Flint propose? Simply this—to follow up the work of the Royal Commission by taking part in a Conference of the nations of the world. That is all. The last words of the Motion govern the whole. The Conference would consider whether bimetallism can be re-established in the interest of all the nations concerned. There can surely be no danger of peril to English interests in such a Conference. The Conference would come at an opportune time. The world is awakening to the importance of a good understanding between nations. The recent Conference held at Berlin was described by Cardinal Manning, who can look back on 80 years of an eventful life, as one of the greatest events of our time. Whatever may ultimately come out of the deliberations of that Conference, it must surely be regarded as an acknowledgment that no nation is so self-contained, so self-sufficient as to have no need of other nations. The summoning of the Berlin Conference is an acknowledgment of the truth that we are all members one of another. It is but 40 years since the Prince Consort of England suggested the holding of a Great Exhibition. in Hyde Park to which all nations were invited to send their best industrial products; and now the German Emperor, the grandson of the Prince Consort, invites the great Powers of Europe to join him in trying to improve the condition of those whose lot is that of manual labour. It may well be that the Emperor sees that the policy of "blood and iron" has had its day, and that there are surer ways to national weal than by breech loading guns and magazine rifles. For many years a dark cloud has hung over Continental Europe threatening to burst in war of unprecedented magnitude. The Emperor of Germany, by means of the Berlin Conference, may have set forces in motion which shall disperse that dark cloud and bring us nearer to the time when military burdens shall cease to weigh upon and oppress peaceful industry. The hon. Member for Flint invites the House to assent to the holding of a still greater Conference—a Conference of the chief commercial nations of the world—to consider whether it is possible to devise means whereby all nations may exchange the products of labour without waste and loss. The saving of waste leaves a large margin for profit. Naval engineers and telegraphists have brought nations ever closer and closer together. May not the best minds of every nation, meeting in Council, complete the work by insuring that people everywhere shall gather and enjoy the fruits of their own industry? It would be a Peace Congress of the greatest magnitude, and if successful its beneficial results to all countries would make for "Peace on earth and goodwill among men."

*(9.52.) SIR LYON PLAYFAIR (Leeds, S.)

Before I proceed to deal with the Resolution proposed by the hon. Member for Flint, I should like to show how shorn and bald it is compared with that Tabled last year by the Minister for Agriculture. The original form of his Resolution gave much condensed instruction to the House, and was bold as to its assertions. It began by saying that the recent divergence in the price of the precious metals Is prejudicial in the highest degree to the finances and the Government of India, and is detrimental to our trade with the silver-using countries. It then suggested that the recent and prolonged depression of trade and agriculture, and the irregularity of employment "for vast numbers of the population," was largely owing to the changes in the value of gold and silver. In the speeches which followed the Resolution we were told that the prices of commodities were lowered and that the wages of the people were reduced. That redundant Resolution and the commentaries upon it left the House in no doubt of the views of the bi-metallists. Though that was the character of the Resolution Tabled by the Minister of Agriculture in its passage from the Table to the Chair, some experienced Parliamentary hand seems to have pruned it of all its reasons, and left it in that mild and unassertive form in which it is again offered to-day. The present Resolution assumes that "evils" still exist, though it is not stated what they are. Trade has improved, and the prices of commodities have risen considerably, in spite of the alleged scarcity of gold and the disuse of a silver standard abroad. The chief depression which still exists is in agriculture. The reason is that farmers still keep to the domestic character of their production. All other industries have re-organised their methods in the last 20 years in order to adapt themselves to the changed conditions of production and distribution. Last year the Resolution declared that the divergence in prices of gold and silver was highly detrimental to India. There was some support for that statement in an almost despairing Despatch from the Governor General in September, 1886. The cry of despair was taken up by the Minister of Agriculture, who said— India is suffering most severely from the present state of things; and if there he any further fall in the price of silver, which is certain to occur unless effectual steps are taken to arrest it, India will he brought to the verge of ruin and bankruptcy. That Cassandra prophecy of woe was given in December, 1888. The divergence in prices still exist, but these wails of despair were changed into a song of triumph by the Finance Minister of India, Mr. Steel, in a Report made to the Government in 1889, in which he said— We have reason to look forward with hope to the future of agriculture, the great stand-by of the Empire; it is nourishing as it never nourished before. The manufacturing interests are prospering and developing to the great benefit of the country. Trade is growing in magnitude; communications are being rapidly improved. Our debt, though large, is amply covered by the value of State property. Imports from and exports to India have largely increased since 1873 and to a less extent in other silver countries, and are especially large in. the Argentine Republic. It was prophesied that on account of the difficulties of exchange no more capital would be sent to India for improvements. As a fact, we increased our loans to that country by £15,000,000 between 1880 and 1888. To-night the Movers of the Resolution have abandoned their old selected battle-field of India and have chiefly referred to the influence of the changed currency on Lancashire, especially as recent Returns show a falling off in the exports of cotton goods to the East, although that is coincident with a rise, not a fall, in the price of silver. Sudden fluctuations in exchange are, no doubt, harassing to all commerce, but a persistent low rate of exchange can always be provided for by any merchant of experience. Ho buys goods at gold prices, and knows exactly the exchange value of the silver which he gets by the sale of his goods. But I am not surprised at the working man—I will not say being deluded, because I believe in the utmost sincerity of the bi-metallists and their views on these questions— but I am not surprised that the working man hearing the arguments of the Bi-metallist Association, and having them over and over again, comes to believe that this state of low wages and want of employment during the time of depression arises from these causes. They saw that mills were rising in India. What has led to cotton spinning in India? It has been conclusively proved that the value of the rupee has not fallen in India. It is the possession by that country of cotton—the raw material of the industry —rand the cheap labour of the workers which fully accounts for India entering into competition with Lancashire goods. It is in the highest degree doubtful whether the divergence of gold and silver in Europe has anything to do with manufactures in the East. Those who oppose bi-metallism deny that trade depends upon metallic currency. Trade rests upon barter, and anything which profoundly alters production and distribution of commodities necessarily acts upon it. Soon after 1873, there was a great development of railways in the United States and India. At that time also the Suez Canal worked a transformation in commerce. It gave an enormous impulse to steam navigation, especially when duplex engines were introduced, and large existing fleets, both of sail and steam, were swept away as antiquated. Trade had to adapt itself to new routes and conditions of traffic. While commerce was being transformed, production in manufactures was vastly increased, and it became larger than the consumption. It took time for the world to adapt itself to the changed conditions, and that period was marked by depression of trade. I cannot say what are the cardinal doctrines of faith of bi-metallists at the present time, but I know that up to a recent period one of them was that the scarcity of gold has produced its appreciation, in consequence of which the prices of commodities fell. I admit that this view has received a considerable amount both of direct and indirect support from the unfortunate manner in which the Royal Commission reported. Undoubtedly, in recent years, various States have increased their gold coinage and lessened that of silver. Where has been the sign of scarcity of gold? Silver has been displaced, but gold has flowed in with perfect ease to supply it. The stoppage of the legal ratio by the Latin Union in 1873 did not demonetise silver; it simply altered the distribution of silver coins. Between 1876 and 1880 the silver coined reached the enormous total of £129,500,000, about 40 per cent. higher than when the legal ratio was kept up by the Latin Union. To speak of the "con-sequent demonetisation of silver" in the face of such increasing silver coinage is an absurdity. When the main argument for bi-metallism is the scarcity and consequent appreciation of gold, surely we may call upon its advocates to tell us what they mean by scarcity, and to give us proofs that it exists. Scarcity in commodities such as grain or cotton means that there is an insufficient quantity for consumption. But gold, though it wastes a little by use, does not disappear in consumption; it only circulates. When does gold become so scarce as to appreciate in value and lower the prices of commodities? On the other hand, under what conditions does it become so abundant as to depreciate in value and to raise the prices of commodities? There must be some happy medium between abundance and scarcity when it neither lowers nor raises prices. These arc fundamental questions which ought to be answered by those who seek to alter our monetary system. There are definitions in abundance as to the amount of money which a man ought to possess. Locke and Petty put it as one-fiftieth or fifty-second part of the annual wages or half the annual rent of land. I do not desire to fix upon the bi-metal-lists either of these definitions, for times have changed; but I cannot argue on scarcity or abundance of gold without some proof or explanation of what the terms mean. I admit that business is done with a much smaller quantity of gold than was deemed necessary 20 years ago. Other nations are now imitating our banking system, and the transference of coin from hand to hand is greatly economised by instruments of credit. The liabilities of our banks to the public amount to £621,000,000, or nearly the figure of the National Debt; but the amount of coin or bullion to meet this liability is only about £35,000,000, or, if we deduct from each side of the account the £8,000,000 locked up in the Notes Department of the Bank of England, it is £27,000,000, or only 4Z½ per cent. of the liabilities. What would have been scarcity 20 years ago would be perplexing abundance now. The last stronghold of the bi-metallists is that France for 70 years, aided by the Latin Union for eight of those years, maintained a fixed ratio of gold and silver at 1 to 15½. There was no inherent virtue in that ratio. When it was established in the ninth year of the Revolution, that happened to be the market price of silver. To propose to re-habilitate it now when the ratio is as 1 to 20, is a very serious proposal. But it is not true that France coined gold and silver indifferently at 1 to 15½ during 70 years, that is, from 1803 to 1873. The market prices showed constant variations from ½to 3 per cent., and sometimes much more. Free coinage, which was the essence of a bi-metallic system, became impossible under these fluctuations, and for 50 out of the 70 years it did not exist except to a limited extent. When gold was cheap gold coinage was encouraged; when silver was cheap that was coined chiefly. Thus, from 1821 to 1850, or for 30 years, silver was 2 per cent. cheaper than gold, and France coined 87½ per cent. of silver and only 12½ of gold. In the next 20 years ending 1870, gold fell under the legal value, and the Mints of France, and later of the Latin Union, only coined 10 per cent. of silver, while they coined 90 per cent. of gold. So that during 30 years France was practically mono-metallic on the basis of silver, with gold at a premium; and in the next 20 years she was practically still mono-metallic, but on the basis of gold. In fact, though France was bimetallic in law, she was practically monometallic in practice for at least 50 out of the 70 years. During the 50 years when the coinage was practically mono-metallic, a far more powerful law than the Bimetallic Law came into operation. This was the Gresham Law, by which the metal, over-rated on the ratio, forced the dear metal out of the market. It was this law, and not German silver, which broke down the Latin Union when silver became abundant and fell in price. Silver having become cheaper, the Gresham Law forced it into coinage. A legal ratio is only possible on two conditions (1) that the Mints are the dominant buyers and use most of the annual product in coinage; and (2) when that product is moderate in quantity. The legal ratio broke down because the artifice by which France held it up could no longer bear the strain. But silver was coined in much greater quantity than at any previous period. The increase of silver coin was 54 per cent. greater in the five years ending 1875 than in the preceding five years. What Germany did was to call in her miscellaneous coin and issue uniform coins of gold and silver. The silver in the Bank reserves and that hoarded by the Government was thrown on the market, and, no doubt, influenced the prices on a falling market. From 1873 to 1879 Germany sold silver to the amount of £28,357,000, or an average of £4,000,000 annually. It was soon absorbed by the coining nations, which required, and did coin annually more than double the amount of silver thrown by Germany on the market. The production of both gold and silver since 1873 has been greater than at any period of the world's history. Before the Californian discoveries, the annual mean product of gold never exceeded 20,000 kilogrammes; now it is eight times as much, or 160,000. Silver has not increased in the same proportion. The mean annual product of silver for the 70 years when the legal ratio prevailed was 838,000 kilogrammes, but the mean annual product since that date has been above 2,500,000, and is now about 3,000,000. Formerly the Mints coined nearly all the gold produced, and when the goldsmith wanted it for his art he melted down sovereigns. But now the supply of gold is far in excess of the demands for coinage, which steadily decrease. In the decade ending 1860 gold was cheap, so the Gresham Law forced 81 per cent. of the annual product into the coinage of the world. In the next decade ending 1870 gold was becoming dearer, and only 54 per cent. of the product was coined. In the decade ending 1880, 45 per cent. was used for coinage, and in the last five years of Soetbeer's Tables, ending 1885, only 23 percent. was used for coin. At least 75 per cent. of the annual product of gold is no longer used for coin. How is it that gold has kept up its value and that silver has fallen? The reason is obvious. There is a demand for gold outside that of the Mints, for industrial purposes, for bullion, and hoarding, which takes 75 per cent. of the produce. About 60 per cent. seems to be used in the Arts. Silver, on the other hand, is chiefly valuable for coinage, industrial uses scarcely amounting to 27 per cent. of the product. Unfortunately, its use in Arts is not extending. Though the Mints are the chief purchasers of silver and the smallest purchasers of gold, they are quite unable to keep up the price of silver. The Mints of the United States, of France, and of India, have laboured to keep up the price by enormous coinage, but hitherto they have failed. The sum of our knowledge of the commissions of different nations is, that though gold has largely increased since 1850 in annual product, the demand for purposes other than coinage, industry, bullion, and hoarding—has been so great as to keep up its price. Silver, on the other hand, though its product has also increased and though the demand for coinage up to 1880 often exceeded the annual product, has been in such small demand for industrial purposes that its price has fallen. One of the chief reasons for this seems to be that in a busy country of large commerce silver is too bulky and heavy for use as a coin in important transactions. Silver, as a fractional coin and of token value, is indispensable. The French and United States coins, with their legal ratio, are not full weighted. What has happened in America even with light silver dollars worth only 75 cents? In 11 years the United States has coined no less than 300,000,000 ounces of silver, and has now in the Treasury 335,500,000 dollars and fractional coin worth £69,000,000. In spite of this enormous coinage silver has fallen 20 per cent. in that period. The silver coin is stored away in vaults and cellars and is of no use to any human being. The silver thus locked up will remain a useless accumulation, at least until the country reduces itself to a mono-metallic silver standard. You might as well have the cellars filled with Holloway's Pills, or Pear's Soap, as with the silver. The silver coin in actual circulation is little more than one dollar per head of the population, though 290,000,000 dollars are represented in paper certificates. Past experience has shown that no legislative union of gold and silver will persuade merchants to fill their pockets with silver in small transactions, or to receive it in cartloads or shiploads in large dealings. The legal ratio in America is one ounce of gold to 16 ounces of silver. If you want to use it as coin you must have 16 times more strength to handle it, 16 times more transport to carry it, and 16 times more space to hold it. So that you have a misapplication of 16–17ths of human effort in using silver instead of gold for the purposes of commerce. The hon. Member for Flintshire (Mr. S. Smith) and the hon. Baronet opposite (Sir W. Houldsworth) contend that the legal union of silver and gold will add more strength to the currency. It was quite true that if you yoke a carthorse to a racehorse the strength of both would be increased. But the speed of the racer would be sacrificed. Gold is more easily handled and transported, and does its work with more celerity. To ask civilised countries with large commerce to go back to a bulky and heavy standard like silver, or to couple gold and silver together is, in fact, like asking nations to give up railways and go back to stagecoaches as a means of locomotion. The bi-metallists seem desirous to restrict trade as Lycurgus did when he forced the Lacedæmonians to use iron as money in order that its weight might deter them from over-much trading. Each country adopts the money best fitted for its own work. Silver is not so well suited as copper for the uncivilised parts of Africa, for semi-civilised nations it is better adapted than gold for the standard. Before 1816 England, like other civilised nations, found the double standard of silver and gold well adapted for its transactions. In 1873 many nations preferred, like England, to adopt the single gold standard. What was it that converted 309,000,000 bi-metallists to become mono-metallists? It was the simple fact that the supply of silver became greater than the demand for it as a circulating medium. When these nations used both gold and silver in the ratio of value of 1 to 15½, the ratio of the annual product of the two metals was only as 1 to 7, but now it is as 1 to 19. In America it is 1 to 20 or 1 to 30. If the power of Statute Law could override the laws of supply and demand and give a legal value to two metals, it would be more simple to fix a ratio of equality and say that one ounce of silver should have the same value as one ounce of gold. The hon. Member for Flintshire admits the logic of the position. He says that Statute Law could create and uphold equal values between the two metals, but that he prefers the ratio of I to 15½ because of old experience. I wonder that it did not occur to my hon. Friend that Statute Law is powerless to control laws of nature. Locke, in his famous essay on currency, put this very clearly— You will as fruitlessly endeavour to keep two different things at the same price one with another, as you could keep two things in equilibrium when their varying weights depend on different causes. The hon. Member for Flint has quoted several benevolent passages from remarks made by the present Chancellor of the Exchequer in relation to a silver currency, but there is one passage he has not quoted. At the Conference of 1878 our present Chancellor of the Exchequer was the delegate of England, and in his final speech on that occasion said— As for the desire that has been expressed that a fixed ratio may be established between gold and silver and an International value be given to them, I declare that in my view it is impossible to realise this, impossible to maintain it in theory, and that it is contrary to the principles of science. The bi-metallists wholly disagree with Locke and the Chancellor of the Exchequer as to the physical impossibility of keeping up a fixed ratio, for they contend that what is impossible for a single nation is quite possible for a combination of nations. What does this admission amount to? It is giving up bi-metallism as a principle, and relying upon it as a Trust Syndicate. No doubt such an International Syndicate would raise the price of silver up to a certain period, and would greatly stimulate its production. What has happened in the recent copper ring would certainly happen in a new silver ring. The bi-metallists desire a Conference. What can a Conference do in regard to supply and demand? Suppose all nations agreed to dress their soldiers and reserves in red coats and blue trousers and to establish a bi-colour ratio between the red dye stuff of madder and the blue of indigo. No doubt the price of both would rise, and France, Turkey, and Holland would again open up vast areas to the production of madder, and India would open new vats for indigo. How long would the price last at a fixed rate, especially as there is an outside demand of 24 civilians for each soldier? I can understand why America should advocate a bi-metallic league; but I am inclined to agree with a quiet writer like Jevons even when he remarks— Does it not seem outrageous folly for England to create a factitious demand for silver in order to keep up the profits of the Nevada Mines? The chief commercial nations of the world are to be called together to consider whether a bi-metallic system can be established in their common interests. England, the great creditor nation of the world, is to invite the debtor nations to confer with her as to whether the debts contracted in gold since 1816 may be repaid in depreciated silver, which the experience of centuries shows is the metal most liable to fluctuations in price, and which is certainly a worse medium of exchange and probably a worse standard of value. Of course, with a legal tender of an overrated metal silver would displace gold in our currency. No doubt the other nations will willingly, nay joyously, invite this country to walk into their parlour and receive the innocent fly. Practically the proposal is to widen the Latin Union, by including in it England, Germany, the American States, and perhaps India. Certainly there is novelty in the idea. The Latin Union was quite powerless to uphold the conventional ratio; but an enlarged Latin Union, containing' England, which is facile, princeps the great creditor nation, would, I admit, be much more stable. How long would this stability last? Just as long as England remained in the Union as a meek sheep to be shorn of her wool by the debtor nations. Modern bi-metallists are like the ancient alchemists, only that they are upside down. Our former Monarchs used to keep alchemists in their households to transmute silver into gold: but now our bi-metallic alchemists are striving to convert English gold into foreign silver—the nobler into the baser metal. I am sure it is in the interest of England to adhere to her monetary system in perfect independence of other nations. Bi-metallism is a theory which the Royal Commission could not agree to recommend. The hon. Members who move the Resolution express their satisfaction with some of the admissions of that Commission. Why do they not attach importance to the final conclusion of Lord Herschell and his co-signatories, when they say— The change proposed is tremendous, and we cannot hut feel that, to a great extent, it would he a leap in the dark?

*(10.45.) THE CHIEF SECRETARY FOR IRELAND (Mr. A. J. BALFOUR,) Manchester, E.

I wish, Mr. Speaker, that the right hon. Member for Derby, who spoke earlier in the evening, had heard the interesting speech just delivered on the same side of the question as that on which he delivered himself, for I think he would have admitted that if there are philosophers who advocate the bi-metallic heresy the philosophers are not all on one side. Now, Mr. Speaker, my heresy on this question is of rather ancient date. I believe that many Gentlemen on this side of the House have been converted to what is called, not very happily, I think, bi-metallism, by the economic evils which they think, and in my opinion justly think, have flowed from the rupture of the bi-metallic par of 1873, and it was not until the economic consequences of that great currency change had been brought home to them, in the shape of commercial and agricultural depression, that they became converts to the view that a bi-metallic currency is the best currency which the world as a whole can adopt. That, at all events, is not my case. From a, time when I had more opportunity than now of studying economic theories I became a convert to that opinion, which is not the opinion of a small minority of lunatics, as some persons vainly imagine, but is one held by the great majority of experts in France, in Germany, and in America; and I hold that opinion on broad grounds which have been strengthened, but not created by any experience which we have had since 1874. I admit that to attribute all the economic evils under which this country has been suffering for the last 15 years to the divergence between the currency value of gold and silver is not only erroneous in itself, but is in contradiction of the most ordinary economic knowledge, which shows us that for every great economic change a very large number of diverse, separate, and independent forces are responsible. But because that divergence in value is not wholly or, perhaps, even chiefly responsible for the great disasters that have occurred, that is no reason why we should not remedy, as far as we can, by an improvement of our currency system, the disasters for which that system has been responsible, and why we should not adopt a currency calculated in the future to give us a stability that, unfortunately, has not existed in the civilised world during the last 15 or 16 years. Now, there are three entirely distinct and separate kinds of evils which, I think, may be shown to have followed from the existing currency system. The first evil, and, I think, in some respects the least evil, though it is one that is especially felt in Lancashire, is that which results from the admittedly temporary circumstance that a bonus has been given to Indian exports by the process of the fall of silver. The right hon. Member for Derby told us that, though this was an admitted evil for Lancashire, it was an unmixed benefit to India. I will come to that point directly, but let mo point out, with regard to Indian manufactures, that we cannot regard any temporary stimulation of its export trade as an unmixed benefit. One of the great evils of any bounty system—and this by the hypothesis is a bounty system —is that it is, or may be, temporary in its effects. It stimulates trade, but when it ceases there is nothing to support the accumulation of labour and capital in an industry predestined, from natural and permanent causes, to ruin, or comparative ruin, at no distant date; yet while the benefit conferred upon India, the country in which the bounty is given, may be temporary, the injury done to England, the country against which the bounty is directed, may produce evils of the most serious kind. Because, notice this— the evils arising from a diversion of trade from one channel to another by artificial moans, are not to be measured by a, simple consideration of the loss or gain to the community from having to purchase a dearer or a cheaper article. A great injury to the community arises from this fact—that when an industry moves, the instruments of production either do not move at all, or move with very unequal facility. You may easily transfer floating capital to a more profitable industry; but that part of capital which is embodied in machinery and buildings you cannot move at all, while labour moves only with the greatest difficulty, and at a great cost of inconvenience and suffering. The Lancashire labourers who suffer from this temporary bounty given to the Indian labourers cannot transfer their industry to a new market, while the Indian labourers will in their turn suffer when the artificial bounty produced by the divergence between gold and silver comes to an end. Now I go to the second effect produced by our present system, which is the uncertainty of exchange. Now, the uncertainty of exchange is a wholly different evil from those to which I have just referred. It would exist equally though silver were appreciated instead of depreciated, and would produce consequences probably not less disastrous. The right hon. Member for Derby, who cannot pursue his consideration even of a currency question without calling into play his great controversial talents, even though his friends and not his enemies are his victims, chose to use the most violent language against the Indian Administration who were his colleagues in 1886 when he was Chancellor of the Exchequer, and he told us, in words which unfortunately I did not take down—and I cannot from my own resources successfully imitate them—that they bitterly complained of the extension of Indian manufactures and productions. Now, I assert with confidence that no Indian Government ever complained of that; what they complained of was that the whole of Indian finance was thrown into disorder by the uncertainty in the exchanges, and that the result of the disorder in Indian finance was suffering to the Indian taxpayer. I might refer here to the embarrassment caused in International transactions between gold and silver-using countries by this uncertainty; but the matter has been so well put by my hon. Friend the Member for Manchester, that I will at once pass on to the third evil arising from the divergence of value between the two currencies, which is, in my opinion, the most important of all. What the world requires is a permanent and a stable currency. Money is a measure of value, and it performs not only the function of measuring the value of the transactions from day to day, but it acts as what has been called a standard of deferred payments; and unless your standard of deferred payments is in itself a stable standard you necessarily inflict areathardship either upon the creditors or upon the debtors in a community. Some have argued as if those who are in favour of bi-metallism desire a currency inflation. I do not desire a currency inflation; though, no doubt, if we must suffer either from inflation or from contraction, then I say let us suffer from inflation. What I desire is, that we should do our best to find a currency which will be neither subject to serious inflation nor to serious contraction; and I cannot conceive how anyone who has studied this question can doubt that a currency formed of two metals would be less liable to the violent changes of value that the existing mono-metallic currencies. The right hon. Gentleman asked us to define in what consists the scarcity of gold? The scarcity of gold, or of any currency, exists wherever the standard of deferred payment seriously alters its value in an upward direction. It can be shown, as I believe, that where a bimetallic currency exists such scarcity is less likely to occur. To those who think it unlikely to occur under our present system I should like to ask whether they think the tendencies of commerce are in the direction of depreciation or appreciation? I admit, so far as you invent new banking facilities and new methods of economising the precious metals in their work as coins, so far you mitigate the inconvenience which must ensue from the increase of population, the increase of production, the increase of commerce, and the increased amount of work which you throw upon your currency. But do you expect that, in the long run, these banking facilities will keep pace with the increased amount of labour which you are deliberately throwing upon the gold standard? We have heard a great deal to night, and have seen a great deal in the Press, to the effect that the fall in prices is owing, not to the scarcity of gold, but to the increase of commodities. I am not sure that the distinction is not entirely fallacious. So long as the work a given amount of money has to do increases (it matters not from what cause), so long will you suffer from the evils of an appreciating currency. Do not mono-metallists regard with apprehension the effect of reversing the legislation of silver-using countries? If America to-morrow were to decide that it would have no more to do with silver, but would work its whole commercial system on a gold basis, where would prices be? Do you seriously think that a gross injustice would not be done to the debtor, that grave injury would not be inflicted upon commerce, and a serious difficulty be thrown upon the Government of India? In the absence of international agreement you are not only perfectly helpless to prevent changes of that kind, but you would not have the slightest ground of complaint against the Government which caused all the inconvenience. The conclusion that I draw from this very brief analysis of the evils and advantages, relatively of the bi-metallic and the mono metallic systems is that if you can establish a bi-metallic system you should do so. For the House will, I think, grant this: that if you had a bi-metallic system you would get rid, in the first place, of the artificial bounty which everybody admits to be an evil in International transactions. In the second place, you would get rid of the uncertainty of exchange, which is admitted even by the right hon. Gentleman the Member for Derby to be a great impediment to manufacture and trade; and though I do not say you would get rid altogether of the oscillations and variations in your standard of payment, you would greatly diminish them, while you would entirely remove the evils which have arisen in the past, and must arise in the future, I fear, from the independent action of countries with regard to the currency they choose to employ. We have only, therefore, to consider whether a bi-metallic ratio is possible or not. The first observation I have to make on that point is that the problem has been solved by experience. The thing has been done. I do not think the right hon. Gentleman himself will attempt to deny that it has been done, and that the relatively small commercial community of France, Belgium, and Italy were able by their united action to give us all the benefits of a stable exchange which we were too dull or too lazy to obtain for ourselves The right hon. Member for Derby, who, I observe, has just come in, asked why, if it was so advantageous, did the Latin Union give it up? Well, the Latin Union gave it up for reasons perfectly consistent with the bi-metallic theory. Nobody denies that there is a point after which a bi-metallic country will be denuded of the more expensive metal. The smaller the bimetallic area the more easily that point is reached. The action of Germany in 1873 did undoubtedly throw, in the opinion of French statesmen—I do not say whether they were right or wrong—a burden on the bi-metallic machinery of the Latin Union more than it could bear. That has never been denied by any bi-metallist. On the contrary, it is what some bi-metallists prophesied would occur under such circumstances. But is that any solid argument against introducing a state of things in which there will be no country like Germany outside the Union, and in which the bi-metallic area, instead of being confined to France, Belgium, and Italy, would embrace practically the whole commercial community of the world? Now, the right hon. Gentleman the Member for Derby drew a hypothetical picture of what the world would be like if the bi-metallic dream, as he would call it, were to become a reality, and if some great political catastrophe like the Franco-German War were to occur, and an important country like Germany were to withdraw from the Union. The picture does not alarm me. What motive would Germany—taking that country for the purpose of illustration—have for withdrawing? The right hon. Gentleman says, "In order to get gold." He says that gold would naturally flow to the country where most could be got for it; that if gold was unduly depreciated in the Union, the country that left the Union might get it; and on that basis he founds the theory that Germany, desiring to get gold quickly, would be tempted to leave the Union. But that would only happen if the ratio between the two metals were disturbed. If you have a sufficiently large area, if, as the minority on the Commission proposed, you embrace practically the civilised world in your bi-metallic area, the action of one country in leaving the Union could not disturb the ratio. And since it is only through a disturbance of the ratio that it would attract gold, it could not have any motive for leaving the Bi-metallic Union. Let me also point out, in the second place, that a country which is just going to war does not take that opportunity of entering into a currency operation which certainly would not have a quieting effect upon its Money Market; and, in the third place, let me point out that the effect of the adoption of the system must necessairily be a slow effect. It would not be like raising the bank rate, which brings in gold at once into the Bank of England. Gold would only come in by a slowpercolation of appreciated metal from the bi-metallic countries. The third objection, and possibly the most important, depends upon the theory that legislation cannot fix the ratio between any two metals for currency purposes. Now, I do not think that a question like this can be argued fitly in an Assembly of this kind; but let me point out two or three facts which bear on it. My right hon. Friend the leader of the House read some very in-terestingextracts from the Debates which occurredin this House in 1830, from which it appears that the universal opinion of competent authorities—among them Sir Robert Peel and Lord Althorp—then was that to endeavour to fix a ratio between the two metals was to run counter to the inevitable laws of nature. But since that date a complete revolution has taken place in the way in which, in this country at least, economists look at this question. I do not believe that you will find a theoretical teacher or professor of position under 50 years of age in America, Germany, France, Italy, or England who is prepared to stake his reputation on the theory that you cannot fix a bi-metallic ratio. As many who have devoted themselves to the theoretical consideration of this question know, the view of the right hon. Gentleman the Member for Derby is antiquated. I state that with some confidence, for I observe always that the right hon. Gentleman is a Tory in the wrong place. Consider the Report of the Commission. It will not be asserted that that Commission was composed of persons of very radical tendencies on currency questions. In fact, a large number of them were deeply imbued with and attached to the doctrines prevalent in England 30 years ago; yet every one of those gentlemen, differing as they did upon many points, was on this most important issue convinced by the force of logic and argument of the fact that there is no inherent difficulty in establishing a fixed ratio between the two metals.

*SIR J. LUBBOCK

Two Members of the Commission expressed a diametrically opposite view.

*MR. A. J. BALFOUR

Of course, I accept any statement made by the right hon. Gentleman. I am quite aware that two Members, the right hon. Gentleman being one of them, signed a minority Report; but I do not understand that they deliberately traversed the statement that a ratio could be established between the two metals. If it be possible, as I believe almost every economist of repute holds it to be possible, to fix, by international arrangement this ratio between the two metals, is it not preposterous that a question of such supreme international importance should be left wholly to the separate action of different nations? Postal questions and labour questions we can settle internationally, but currency questions, it appears, we cannot so settle. Though we were told by the right hon. Gentleman who spoke last that commerce was an international affair, the currency which is so intimately connected with commerce appears not to be an international affair. It seems to me to be of all international affairs the most international, the one that most deserves to be treated by common arrangement among nations. I, of course, admit that there may be difficulties in establishing this system; but I think those difficulties have been exaggerated. When I reflect that great nations have gone from inconvertible currency to convertible currency, from depreciated to un depreciated currency, from silver, to gold, and from gold to silver without those colossal disturbances and those serious diversions of trade which the right hon. Gentleman anticipates, I cannot help thinking that possibly those who, like my right hon. Friends the leader of the House and the Member for Derby, anticipate commercial disaster, not from the system, but from the process of its establishment, exaggerate the danger they fear. I frankly admit that I have not sufficient acquaintance with financial details to give to the House an opinion on the subject which is worth very much; but I have noticed in looking over the commercial history of the world that in almost every question the practical men ultimately come round to the side of the theoretical men. I am prepared, like the right hon. Gentleman, to appeal to the early experience of the century. He is as well aware as I am that the Directors of the Bank of England of that day and the commercial classes whom they represented were vehemently opposed to the resumption of specie payments, and anticipated the most serious commercial consequences from the reversion to the gold standard in England. Those anticipations were combated by theoretical men like Ricardo and others, and they proved to be unfounded. I am far from saying or thinking that the opinions of the great practical financiers and bankers of this country are to be despised—far from it. I know that nothing can be done, and I would suggest that nothing should be attempted which is against their views and wishes. I think it is from a discussion such as this that those who are engaged in the practical financial operations of London and other centres may-see what dangers they run or may run from allowing every nation independently to settle, not for itself, but for the world, the currency that is to be adopted—from allowing Germany to decide whether the Indian Government shall or shall not have a tax on Indian rice; from allowing America to decide whether or not debts shall be paid at a rate which is equivalent to putting 25 per cent. additional burden on the debtor—and they will come round to the view that in the face of the rapidly-growing commerce of the world, in the face of the increasingly international character of the commercial transactions, it is desirable that some international arrangement should be arrived at which would not only have the effect of entirely preventing these daily oscillations between silver-using countries and gold-using countries which now perplex merchants and manufacturers, but will also have the effect of giving a more stable index of the measure of the permanent indebtedness of the world than they can ever hope to have under the mono-metallic standard. I trust the House will understand that. I adhere now as always to the view that the bimetallic standard is the best; at the same time, I feel bound to give additional emphasis to what I have already stated, that it would be folly and madness in any Government to go in advance of the educated commercial opinion of the country. I certainly should think it not far from lunacy to attempt to force on the United Kingdom and the City of London a form of currency they did not thoroughly adopt and believe in.

*(11.26.) THE CHANCELLOR OF THE EXCHEQUER (Mr. GOSCEN, St. George's,) Hanover Square

One of the last words which fell from my right hon. Friend was the word "lunacy." I have been told that there are three great forces which produce lunacy—love, religion, and currency. From his extremely luminous and sane speech it is clear that at least the last of these three forces has not in the slightest degree affected him. I think that mono-metallists have made a great error in not grappling more seriously and at an earlier period with the problems which bi-metallists have put forward. There are too many mono-metallists who simply treat the whole bi-metallist theory as if it was not worth consideration. That is a practice to which I always demur, for I hold that many of the arguments adduced are strong arguments and require to be seriously dealt with. But the great point is this. Supposing we were to adopt the bi-metallic system, and were to remedy, as I believe we should to a considerable extent, the grievances which are alleged, and I believe with great truth, to exist under the present system, should we not at the same time be opening up serious grievances, great risks in another direction, the ill effects of which we might possibly not be able to see at the present moment? I accept two out of the three points put forward by my right hon. Friend and other speakers on behalf of bi-metallism. I believe that the uncertainty which is produced in our transactions with India by the present state of things is unsatisfactory, and if we could meet it, it would be an enormous advantage. Still, it is perhaps possible to exaggerate the inconvenience which arises from this uncertainty, because after all there are a great number of countries with whom we trade whore the same uncertainty exists, and it exists much more in the case of countries with a depreciated currency than in the case of those using silver, and if we were to exclude from the purview of profitable operations all those countries that have a currency less stable than our own, I am afraid the area over which profits are realised by this country would sustain serious diminution. Our merchants are accustomed to deal with fluctuating currencies; and in answer to my hon. Friend behind me I may say that the very telegraph to which he alluded, in his able speech in seconding the Motion, as having diminished the profits of merchants has been one of the chief instruments by which it has been possible to meet the uncertainties of currencies. If I am not mistaken, it is the general practice of merchants at the present time to attempt to meet the uncertainties of exchange by ascertaining by telegraph the exact rate of exchange, and then to cover themselves by securing that rate. I admit broadly that if we should have a similar currency with India, if it were possible to get rid of these uncertainties, we should take a great step in facilitating our relations with that great portion of the Empire. It is to be deplored that such great fluctuations should have taken place. A second object in which I agree with my right hon. Friend is in the desire, if it were possible, to have one currency throughout the world, that all our transactions might be conducted on a more stable footing as regards the metal in which debts are paid. I do not agree with the third point my right hon. Friend made, as regards the grievance he raised with respect to the system of bounties— temporary bounties he called them— which are now offered to the cotton goods manufacturers of India. How can my right hon. Friend be sure that these are temporary bounties? It would have been a temporary bounty in the event of our returning again to the old standard. For a certain number of years we have been considerably below that which used to be considered as the proper standard between the two metals. I doubt whether, unless the countries of Europe and America take some great international action, how far it can be said these bounties are temporary. I do not know how we can regulate them. The House would take a great responsibility on itself if it attempted to decide whether this is a temporary difficulty or a permanent difficulty— and whether, if we consider it a temporary difficulty, we should take steps to throw backward the industrial movement that has taken place in India. We must look at it from the point of view of what is right and what is wrong. We have a serious responsibility in the matter. Supposing we endeavoured to meet all the difficulties that exist at the present moment, we have to consider whether in doing justice to some, we may not find ourselves doing an immense injustice to others. Look at the position of India in this matter. There was a time when India suffered enormously from the fall in the price of silver. Some 10 years ago, and even later, the sufferings that India experienced were extreme, and I differ entirely from the right hon. Member for Derby, who attempted to minimise these difficulties, and said that the question was as to the salaries of a few Indian officials. India owed £15,000,000 to this country, and it had to remit that £15,000,000 here in gold, and the loss on exchange which India had to bear amounted to £3,000,000, an amount which paralysed for a long time the whole finances of India. But I am not sure whether I. exaggerate in suggesting that India has now settled down, more or less, to the new conditions. New trades have been developed in consequence of this state of things, and the price of silver being low has had a great effect upon India generally. Supposing, if it were possible, we were to re-cast the present system and raise the rate of exchange, should we bo right or wrong in taking that serious step? If I had time I should wish to say one word upon that point before I sit down. But with regard to the position of India generally, surely we have to consider this: whether now that these interests have grown up, and now that the very attitude of those who used to speak in the name of India has changed, and they take a different course to that which they recommended before, whether we ought to attempt to restore the old state of things artificially. Thus I doubt whether my right hon. Friend is right in urging this temporary bounty as one of the reasons why we should proceed to the adoption of bi-metallism. I agree that theoretically it is possible to return to bi-metallism; but, while it is theoretically possible, there are many practical difficulties in the way. I do not agree with the right hon. Gentleman opposite, who said that ho could not understand how it could be even theorotically possible. It has been stated by the Royal Commission that the existence of bi-metallism in France did form for a long period of years a powerful means of retaining the ratio between the two metals. By legislation, the ratio was fixed; and the question has been asked, Why did the Latin Union take the course they did? For this obvious reason: While other Mints were open for silver, only a portion flowed into the Latin Union. But the Latin Union saw that it might have to bear the whole brunt of the silver that came from Germany when Germany had adopted a gold currency, and also the product of the new silver mines worked in America., and it was natural that it closed its Mints. We were in the same position in India. While Mints remained open they constitute a powerful force in sustaining the relative value between the two metals. The fact that Germany poured its silver into the Latin Union caused the difficulty in those countries, because the area was so limited. I want the mono-metallist to understand that argument, for if we could get an area wide enough the bi-metallic principle is theoretically possible, provided that you can be certain that all parties will maintain the agreement. But then you come to one of the practical difficulties to which I have alluded, and you must look at the practical difficulties as well as the theoretical possibilities on the other side. I have contended, and I am prepared still to contend, that I should prefer the currency of the world to depend rather upon two metals than upon one metal. To those views I gave expression in 1878. I am not now speaking individually of the United Kingdom; but I should like to see silver pressed into service to do the work of the currency of the world as well as gold, so that the currency of the world should not depend on one metal, but on two. While I rejected the idea of a Bi-metallic Union in 1878, I said this— that the mono-metallists were in the wrong who wished to make a crusade for the adoption of a general gold currency. I should be only too glad if other countries would have a silver currency, for it would steady both the exchanges of this country and of India. Therefore, I do not wish to say one word to discourage other countries from adopting the bi-metallic system. I have always looked upon silver and gold not as antagonistic to each other, not as bring articles, the price of one of which would necessarily fall when the other rose, but I have looked upon them rather as partners who together were doing the work of the currency of the world. Allusion has been made to the rate of discount in connection with the scarcity of gold; but such allusion confuses capital and currency. The alleged scarcity of gold has to me another meaning. I think that the amount of gold used as currency is extremely small to bear the enormous burden which is put upon it. I admit that, as interested in the commerce and monetary system of this country, I feel a kind of shame that, on the occasion of £2,000,000 or £3,000,000 of gold being taken from this country to Brazil or any other country, it should immediately have: the effect of causing a momentary alarm throughout the country. I doubt seriously whether the stock of gold which we have in this country in an available form is one whit too large; on the contrary, I think it is rather too small. Therefore, I think that as long as other countries use silver they are doing a general service to the commerce of the world. If a gold standard had once for all been adopted, and prices had adopted themselves to such a great change, the existing gold might be sufficient for all purposes; but a transition involving a first demand for gold creates great difficulties for those countries whoso currency is gold, because the narrow margin which is now allowed in all currency transactions involves such inconvenience when any sudden demand is made upon what is a comparatively small stock. Therefore, I do not admit the argument which rejects allusion to the scarcity of gold, and I say that I should be glad to see silver performing as much work as is possible in the currency. But we have to see what is practicable. What are we asked to do by the Motion now before the House? We are asked to convoke another Conference to see whether some international agreement cannot be arrived at. Well, Conferences have been held and very exhaustive Reports made, and no result as been possible. We have appointed a Royal Commission, and what is the result? A divided Report; and certainly it is not upon any divided Report that we have a right to take the immensely responsible step of tampering with the general currency. The argument has been used that we might by a general arrangement adopt a bi-metallic system. I have no time now to state what I consider would be the danger of such a course; but though you might have a Conference that would come to an agreement, the interests would be so diverse that? I have very grave doubts whether that agreement would be permanently kept. I ask what security we should have that that agreement would to permanently kept, and not only that, but would it not be necessary also that all countries should believe that it, would be permanently kept? If you knew that there would be no desire ever to draw back, then silver and gold might circulate together on the ratio fixed, subject to one important condition, that the outside uses of gold and silver should be, comparatively speaking, analogous, and that there should be no great desire to use gold rather than silver for any other purposes. But there will always be anxiety to keep gold for emergencies, and it is this which makes mo doubt whether a general international agreement would be permanently safe. My right hon. Friend the Chief Secretary for Ireland did not attach great importance to that objection; but I confess that to me it is a very important one. In case of war every one strains for gold, and hon. Members may not he aware that gold is kept in reserve by foreign countries for the purposes of a war chest. When war was declared, or before war was declared, one country might take measures to attract gold to itself and that might alarm other countries, and there might be a scramble for gold under which the agreement would break down and general confusion arise. Again, you would have to pass through a long period before you arrived at your agreement, and what fearful speculation would not arise in the interval? I admit that that would only be a temporary difficulty; but I think that the Government would only be justified in going to a Conference if it knew that the country was behind it and that it was practically almost certain of success. I think it would be wrong to call a Conference in the belief that we might carry out something which we could not effect without the assent and co-operation of (foreign countries, and which we might not even be able to persuade the public of this country to adopt. Therefore, I hold that it is entirely premature to can such a plan into execution; and I think that hon. Members will do well, acting upon their own responsibility— for this is an open question—to vote that the words proposed to be left out shall stand part of the Question.

*(11.48.) SIR JOHN LUBBOCK

Sir, I do not wish to stand between the House and a Division, and in the few minutes which remain before the necessary close of the Debate under the new Rule it is impossible to reply fully to the two right hon. Gentlemen who have just sat down; but I have been referred to several times in the course of the debate, and there are some points on which I should be glad to say a few words. The case of India has been referred to by several speakers, and, of course, it must be admitted that the Revenue of India, being payable in silver, has fallen in consequence of the depression in silver; but if the Government have received less it is because the taxpayer has paid less. The commerce of India has not suffered. On the contrary, the exports and imports have risen from £93,000,000 in 1873 to £180,000,000 in 1888. Indeed, part of the case of the supporters of bi-metallism consists in a complaint that the trade of India has so greatly increased. I cannot help thinking that the difficulties of exchange have been greatly exaggerated; at any rate, it is a remarkable fact that, while the export trade of India since 1873 has risen more with gold-using than with silver-using countries, namely, 27 per cent. only with silver-using and 62 per cent. with gold-using countries. The right hon. Gentleman said that no one would deny that the fall in silver of 20 per cent. operated as a bounty to that extent in favour of the Indian manufacturer. But that is by no means admitted. Hon. Members near me will, I am sure, demur to any such statement. Suppose an Indian and an English manufacturer send to a neutral market goods of a character which were formerly worth 1,000 rupees, or £50. It is said that a fall of 20 per cent. in prices, including that of silver, gives the Indian manufacturer a bounty of 20 per cent. This is an entire fallacy. No doubt the Indian producer would still receive 1,000 rupees, which would buy as much as before, while the English producer would only receive £37 10s, instead of £50; but then by the hypothesis his £37 10s. would buy as much as £50 did formerly, and as much as 1,000 rupees do now. I do not believe that the fall in prices is due to the fall in silver, or that it implies any substantial appreciation of gold. It is due mainly to improvements in production and greater cheapness in transport. Take the case of American wheat. In 20 years there has been a fall of no less than 20s. a quarter. But then the railway charges from the interior are l1s. a quarter less, freight 4s., loading, unloading, &c, 3s. less, and boys 1s. This accounts for 19s. out of the 20s. No doubt agriculturists and manufacturers suffer from the fall, and I sympathise with them. But when the hon. Member for Flintshire says that the working bees suffer and the drones gain, I ask who gains by the cheapness of bread? Who consumes the wheat? Surely the working bees. The working classes now have good employment, and wages are rising. They are the gainers, and I think the House will long hesitate before they alter the standard of value with the express object of raising the prices of the comforts and necessaries of life. My hon. Friends think they can fix a ratio between silver and gold. I entirely disbelieve in the power of any international arrangement to fix a ratio of value between any two articles of commerce. It has been said by several speakers that this was admitted by all the Commissioners. But that is not so. Mr. Birch and I entirely dissented, and our four colleagues admitted that this might be an agio either on the gold or silver coin. It must be remembered that gold and silver are not merely used for coinage. It is estimated that from £12,000,000 to £16,000,000 are used in the arts. Do my hon. Friends think they can fix the price of what is used in the arts? If not, neither can they do so for that part which is used for coinage. The cheaper metal will inevitably, as it always has, drive out the dearer. Under the bi-metallic arrangement of the Latin Union there was for years a considerable ago on the gold coins, and the arrangement broke down in 1873 because it was found impossible to maintain it any longer. It is a great convenience to have a sufficient amount of coinage of all three metals—gold, silver, and copper. The present system secures this, but under this proposal it would be impossible. No one can foretell what the production of the mines will be, but, as sure as fate, either the gold will expel the silver, or, what now seems most probable, the silver will drive out the gold. The right hon. Gentleman the Chief Secretary for Ireland and his Friends spoke of themselves as bi-metallists. The term was, however, misleading. True bi-metallism would be if the creditor could claim to receive, and the debtor to pay, the debt half in silver and half in gold. But what my hon. Friends propose is that one of the parties to the contract should be allowed to pay either in silver or in gold, at his option. It is estimated that we receive not less than £85,000,000 from our investments over sea; and what a remarkable fact it is that our investments over sea exceed by £20,000,000 the whole rent of the land of our own country, which only amounts to £65,000,000. Now, no doubt, part of the £85,000,000 is derived from shares and freight. But there still remains a very large sum, perhaps £40,000,000 to £50,000,000, payable by agreement, either in gold or silver. My hon. Friends, in their great generosity, propose that we should give to foreign countries the option of paying in which ever metal might become the cheaper of the two. If silver falls we are to be paid in silver; if gold falls, in gold. Moreover, the same uncertainty will apply to our internal trade. In fact, the arrangement will tend to drive all financial transactions to some country which is not so unwise as to adopt such a fluctuating currency. No reference has been made to our colonies. It is not likely that Australia, which produces no silver and much gold, will abandon its gold standard; and unless it does so the difficulties of exchange, whatever they are, will only be transferred from India to Australia. The mercantile community are quite opposed to these proposals. At the meeting of the Associated Chambers of Commerce last year a resolution in favour of bimetallism only found 11 supporters among 174 delegates. The hon. Member for Flintshire says that the prosperity of England ceased in 1873. I do not deny that some trades have been depressed, and that rents have fallen heavily. I sympathise greatly with those who have suffered. But, taking the country as a whole, so far from falling back, there has been an immense advance since 1873. Our exports have risen from £670,000,000 to £740,000,000,and adding on 20 per cent, which hon. Members say is the average fall in prices, the amount would be brought np to £890,000,000, showing the enormous increase of £220,000,000. The annual income of the country has risen from £514,000,000 to £636,000,000, showing an increase of income of no less than £122,000,000. The Clearing House transactions have risen from £6,000,000,000 to £7,600,000,000 showing an increase of no loss than £1,600,000,000. Lastly, Mr. Giffen has shown that in the past 10 years the realised value of the property of the country has risen from £8,500,000,000 to £10,000,000,000, showing the enormous increase of £1,500,000,000. And yet my hon. Friends complain. Surely, such an increase ought to satisfy the wildest dreams of avarice. I cannot, therefore, think that my hon. Friends have shown any reason for a change, or have proved the practicability of the plan they propose, and I hope the House will not agree to the Amendment.

(11.55.) The House divided:—Ayes 183: Noes 87.—(Div. List, No. 52.)

Main Question proposed, "That Mr. Speaker do now leave the Chair."

Motion, by leave, withdrawal.

Committee upon Monday next.