THE GOLD AND SILVER QUESTION. (Hansard, 4 May 1894)

§ * MR. S. SMITH (Flintshire)
said, he feared that he could not promise the House as interesting a discussion as that which had just taken place, but the subject he wished to bring before the House was at least as important as the former one. He believed that, according to the Rules of the House, he could not move the Resolution of which he had given notice, but he could, of course, draw attention to the subject with which it dealt. The Notice he had placed on the Paper was as follows:— To attention to the Gold and Silver questio and to move. 'That, in view of the continued depression in Trade and Agriculture, and the dislocation of exchanges between Gold and Silver using countries, it is desirable that a stable par of exchange between Silver and Gold should be established by International agreement.' It might be thought by some too soon to raise this question after it was disposed of last year; but the House would remember that most important events had happened since then. The Mints of India and the United States had both been closed to silver, and the effect had been to drive down the price of silver from 38d. to 29d.; indeed, it touched 27d. not long ago, and all the evils caused by the demonetisation of silver had been gravely aggravated. He regretted that he could not take the judgment of the House on this question. A great change in public opinion had taken place since last year, and he was not without hopes that if it were possible to move this Resolution, and the Government were to leave the House free to exercise its judgment, a majority would affirm the bimetallic principle. Anyone who was present at the great Conference held during the last two days in the City must have felt that the question had at last 418 taken hold of the financial classes. It was no longer viewed as it used to be, but was being very seriously discussed by the heads of some of the great financial houses. He had had great pleasure in hearing a letter read in Mr. Lidderdale's presence, stating that that gentleman might now be regarded as in large sympathy with the views of the bimetallists. Mr. Lidderdale was probably the most prominent man in the City of London at the present time, and he was only one of many who had been slowly coming round to the bimetallic view. He (Mr. Smith) did not think that the Government were in the least aware of the extent to which this question had gained ground in the country. He wished, in the first place, to call attention to the great depression in trade, which ho believed was mainly the result of the phenomenal fall of prices caused by the demonetisation of silver. He spoke as one who had had 40 years' experience of the cotton trade of Lancashire, and he said it had never been in so desperate a condition before as it had been in the last few years. Profits had almost vanished, and the trade was slowly leaving the country and being transferred to the silver-using countries of Asia. He would give the House two or three figures which would place the matter in the clearest light. He would give the comparative increase of consumption of cotton in the last 20 years in England, on the Continent, in the United States, and in India. The increase in England had been only 17 per cent., or less than 1 per cent. per annum, whilst during the last three years there had been a steady decrease—

§ MR. S. SMITH
went on to say that, whilst the increase of the consumption of cotton in England during the last 20 years had been 17 per cent., the increase on the Continent had been 123 per cent.; in the United States it had been 125 per cent.; and in India it had been 680 per cent. To put it another way, 20 years ago England consumed 46 per cent. of all the cotton in the world, while last year she only consumed 29 per cent. He would only trouble the House with one more reference to figures—namely, those relating to the shipment of yarns from 419 this country to the far East as compared with the shipments from India. In 1876 the shipments of yarns from this country to the far East amounted to 30,000,000 lbs., while last year they were rather less than 28,000,000"lbs.,"showing a declining trade. But let the House mark the difference in India. In 1876 the shipments were only 6,000,000 lbs., while last year they were 132,000,000 lbs., or more than four times as much as they were from England. He asserted that the main cause of this transference of trade was the enormous fall in the price of silver, which acted as a huge bounty on Indian manufactures. The English manufacturer got paid 40 per cent. less in gold from all Asiatic markets than he did 20 years ago, but he had to pay about the same wages and fixed charges; and as a result he found himself almost ground to death, while his competitor in India, China, and Japan sold his goods and paid his wages in the same standard as before—a standard that had scarcely varied in 20 years—and ho reaped such large profits that his trade developed by leaps and bounds at our expense. As a matter of fact, profit had almost gone out of the Lancashire cotton trade. The Oldham Joint Stock Mills, a vast industry employing £6,000,000 of capital, had only averaged 2½ per cent. dividend for the past 10 years, and the capital value of the stock had fallen to something like a third of what it was. From what ho knew of the trade, the bulk of private concerns were no bettor off. The fact was, if matters did not improve, they were threatened with a catastrophe in Lancashire. On the other hand, the profits in India were very large up till last year, when the Mints were closed and the rupee was forced up. The profits in Japan were so large that last year 40 cotton mills divided from 10 to 25 per cent., and they were in consequence running new mills up like mushrooms, and taking away the trade by which the people of Lancashire lived. This state; of things opened up a dreary vista, of endless labour disputes, as employers, to avoid bankruptcy, were forced to bring down wages, which the Trade Unionists were equally determined to resist. He could not speak with the same knowledge of other textile industries, but he understood that the state of the woollen industry was very bad. The iron trade was pro- 420 bably as bad as the cotton trade. The make of pig-iron had fallen from 8,250,000 tons to 6,750,000 in four years; indeed, this great trade seemed to be leaving the country. They were all familiar with the depressed condition of the coal trade, and another labour war seemed looming in the near future. On agriculture he need not say a word; the facts were so notorious. The painful feature of the situation was the decay of the great producing industries by which the masses of the people lived. The Chancellor of the Exchequer (Sir W. Harcourt) would no doubt point to the elasticity of the Income Tax Returns. He quite admitted that he was himself puzzled by this fact, as it did not in the least correspond with the condition of trade. The marvellous way in which the Income Tax keeps up was, he believed, owing to the extraordinary profits of the distributing trades, which bought goods wholesale at 40 per cent. decline as compared with 20 years ago whereas retail prices were relatively much higher. The great cause of the depression of the producing industries was the almost continuous decline of prices since 1873. when silver demonetisation commenced, being over 40 per cent. It was hopeless to attempt to carry on business profitably with such a decline; it crippled all enterprise, led to constant loss, and reduced trade to stagnation. No surer sign of this existed than the extraordinarily low rate of interest for discounting first-class bills. The inevitable result of this state of things was increasing friction in the relations of employer and employed. There had been more violent labour wars and more misery among the working classes last year than in any year since the Chartist riots. If the decline went on labour wars would become more and more disastrous, and a great increase of Socialism would be the inevitable result. We now hear every winter the wail of the unemployed, and if this process went on it would become worse and worse. The same state of things existed on the Continent and in the United States. In all those countries the same great depression existed with bitter labour wars and the great growth of anarchy. One common cause accounted for it all; they were all suffering from the extraordinary decline of prices, which paralysed trade and practically confiscated the capital of the 421 active industrial class for the benefit of the money-lending and mortgage-holding class. No competent economist except Mr. Griffen doubted that the main cause of this trouble was the demonetisation of silver and the consequent appreciation of gold. The history of this century showed the enormous influence of monetary causes. The dreariest time in our country was the period from 1815 to 1848, when prices fell 50 per cent. after the resumption of cash payments, which practically doubled the weight of the huge national debt. Then came the wonderful revival caused very largely by the gold discoveries in Australia and California, when prices rose 40 per cent. in 20 years, and that, too, in spite of an immense increase in production, and the introduction of railways, steamers, and telegraphs. That was the most buoyant period we ever had, and the last 20 years had been just the opposite. The demonetisation of silver had practically undone the effect of the gold discoveries, and prices were now considerably lower than in 1848, or any time, in this country. Let the House contrast the two periods—the one all hopefulness, with trade advancing by leaps and bounds, and the other marked by almost continued depression. In the first period our exports rose from £63,000,000 in 1849 to £255,000,000 in 1873; while they fell back last year to £218,500,000. If we had to choose between an appreciating and a depreciating standard, surely it was much better to have the latter. Many people held a strong opinion that cheap prices were good things. His opinion was, that cheap prices which were due to an appreciating standard were an evil, and nothing but an evil. The great fall in prices bad been the result not of the economising of production, but of the appreciation of the standard. The economising of production was in full force during the previous 20 years without producing a similar result. No explanation could be given of the enormous fall of the last 20 years except that by the closing of the Mints against silver one-half of the money supply of the world had been prevented from doing its proper work. The beneficial effect of a large supply of money was well put by the economist Jevons, who said— I cannot but agree with M' Culloch that. putting out of sight individual causes of hard- 422 ship, if such exist, a fall in the value of gold must have a most powerfully beneficial effect. It loosens the country, as nothing else could, from its old bonds of debt and habit. ft throws increased rewards before all who are making and acquiring wealth somewhat at the expense of those who are enjoying acquired wealth. It excites the active and skilful classes of the community to new exertions, and is to some extent like a discharge from his debts is to the bankrupt, long struggling with his burdens. The period 1850–73 had the benefit of this influence, so well expounded by Jevons. The period since then, thanks to the demonetisation of silver, had had just the opposite, and prices were now lower than at any time within this century. The fall of 40 per cent. since 1873 brought them to a considerably lower scale of prices than in 1848, for the House would observe that a fall of 40 per cent. being calculated on a higher figure was much more than the rise of 40 per cent. Take 100 as the average price of 1848, a rise of 40 per cent. took it to 140, but a fall of 40 per cent. on this figure took it to 84, or 16 per cent. under the prices of 1848. A common feature marked these periods of a great fall of prices. It was the virtual transference to the mortgagee of much of the property of the nation. Land, houses, factories, industrial plant that wore burdened to 50 per cent. of their value 20 years ago, were now, through the fall of prices, burdened to 80 or 90 per cent. of their value, and in vast numbers of cases the mortgagee had foreclosed. This was felt just as much in the United States, and in France and Germany, as in England. The small farmers in those countries were crushed to death by the money-lenders, and immense social bitterness was the result. Another inevitable result was the growth of protection. All producers in those countries sought to keep up prices by constantly adding to their tariff's, and no country had suffered so much as ours from this process. Most wonderfully had the prediction of the far-sighted man, Ernest Seyd, been fulfilled. Writing in 1871, when the crusade against silver was just beginning, he said— The strong doctrinism existing in England as regards the gold valuation was so blind that when the time of depression set in there would be this especial feature—the economical authorities of the country would refuse to listen to the cause here foreshadowed. Every possible attempt would be made to prove that the 423 decline of commerce was due to all sorts of causes and irreconcilable matters. The workman and his strikes would be the first convenient target, then speculation and over-trading would have their turn. Later on, foreign' nations, unable to pay in silver, would have recourse to Protection. When a number of other secondary causes developed themselves, then many would-be wise men would have the opportunity of pointing to specific reasons which, in their eyes, accounted for the falling off in every branch of trade. Many other allegations would be made, totally irrelevant to the real issue, but satisfactory to the moralising tendency of financial writers. The great danger of the time would then be that among all this confusion and strife England's supremacy in commerce and manufactures might go backwards to an extent which could not be redressed when the real cause became recognised and the natural remedy was applied. These were just the explanations they heard nowadays from many would-be wise men. The City articles written in the interest of the financial class in London—and the same was true of Paris, Berlin, and New York—had tried for a long time to throw dust in the eyes of the democracy, but the time was near at hand when this conspiracy would be unmasked, and he ventured to predict that some statesmen who were now opposing this movement would experience sudden conversions. The time was far too short for him to go into other aspects of this great question. It would not be fair to subsequent speakers, but it might be expected that he should say a word or two about the crux of the question—namely the ratio to be established. He only spoke for himself, but he did not believe it was either possible or expedient to go back to 15½ to 1. His own leaning was to 22 or 24 to 1, which was about the present position of the respective yield of the metals measured by weight. This would correspond with the rupee at about 1s. 3d. As to the possibility of maintaining that rate by international agreement, he would only say that a Royal Commission of the ablest and most competent men were practically unanimous that it could be done. That opinion was expressed by Lord Herschell, who still adhered to it, and he asserted that no other opinion was possible upon the evidence submitted to them. They simply asserted that what was done in the past could be done again, and done better, because it could be done in a much more scientific manner. He 424 strongly suspected that this country would repeat the story of the Roman King and the Cumæan sibyl. Twice the sibyl brought her books to the King, big with the fate of Rome; twice he refused to give her the price, and each time she burned a portion and raised the price. The third time she came with the remaining volumes, and he was glad to give the enhanced price she asked. Twice this country had been asked by some of the greatest Rowers in the world to aid them in setting up the old bimetallic system, and twice she refused. The time might come before long when she would go cap in hand to ask them to join her, and find the bargain a much harder one to drive than would have been the case had she been wise in time.

§ MR. KNOX (Cavan, W.)
said, he had much pleasure in supporting the Motion. He could not profess to follow the hon. Member, who had such an intimate knowledge of the subject, into the wide aspects of the bimetallic question, but he proposed to deal with the question from the point of view of the Irish peasant farmer, and, therefore, of the whole of the Irish people. The Irish peasant farmer was a man who had to pay every year certain sums to the landlord or to the State, and that sum had been increasing year by year. Of course, be knew there were some people who still denied that there had been any appreciation of gold. The argument seemed a strange one. On the one hand, they were told that the precious metals, like everything else, were governed by the laws of supply and demand. If they were, would it not be the greatest breach of the laws of supply and demand ever known for gold not to have appreciated? Everything had been done that could be done to produce the appreciation of gold. The supply of gold had very slightly increased. The Chancellor of the Exchequer made an exclamation of surprise at that statement. The increase in the supply of gold—