Skip to main content

Full text of "Wages in the West and the crisis in exchanges with the East [microform]"

See other formats




Collection de 





Canadian instituta for Historical Microraproductiont / institut Canadian da microraproductiona historiquas 

Technical and Bibliographic Notes / Notes technique et bibliographiques 

The Institute has attempted to ootain the Ijest original 
copy available for filming. Features of this copy which 
may be bibliographically unique, which may alter any of 
the images in the reproduction, or which may 
significantly change the usual method of filming are 
checked below. 



Coloured covers / 
Couverture de couleur 

I I Covers damaged / 

' — ' Couverture endommagte 

I I Covers restored and/or laminated / 
Couverture restaurie et/ou pellicuMe 

I I Cover title missing /Le litre de couverture manque 

I I Coloured maps / Cartes gtographiques en couleur 

I I Coloured ink (i.e. other than t)lue or black) / 

Encre de couleur (i.e. autre que bleue ou noire) 

I I Coloured plates and/or illustrations / 
' — ' Planches et/ou illustrations en couleur 

I I Bound with other material / 
— ' Relii avec d'autres documents 

Only editnn available / 
Seule MItkxi disponlble 

Tight binding may cause shadows or distortion 
along interior margin / La reliure serrie peut 
causer de I'ombre ou de la dlstorskin le long de 
la marge interieure. 

Blank leaves added during restoratkjns may appear 
within the text. Whenever possible, these have 
been omitted from filming / II se peut que certaines 
pages blanches ajouties lors d'une restauration 
apparaissent dans le texte, mals, kxsque cela Malt 
possible, ces pages n'ont pas M film^es. 

L'Institut a microfilm* ie meilleur examplaire qu'il lui a 
Mi possible de se procurer. Les details de cet exem- 
plaire qui sont peut-6tre uniques du point de vue bibli- 
ographique, qui peuvent modifier une image reproduite, 
ou qui peuvent exiger une modifications dans la mith- 
ode nonmale de filmage sont indiqu^s ci-dessous. 

I I Coloured pages/ Pages de couleur 

I I Pages damaged/ Pages endommagies 

I I Pages restored and/or laminated / 
Pages restaur^es et/ou pelleultes 

rj] Pages discoloured, stained or foxed / 
Pf ges d*color6es, tacheties ou piquies 

I I Pages detached/ Pages detachSes 

n7| ShowthfDugh / Transparence 

I I Quality of print varies / 

' — ' Quality inegale de I'impression 

I I Includes supptementaiy material/ 

Comprend du maieriel suppl6mentai(B 

I I Pages wholly or partially obscured by errata 
slips, tissues, etc., have been refilmed to 
ensure the best possible image / Les pages 
totalement ou partiellement ot>scurcies par un 
feuillet d'errata, une pelure, etc., ont ete filmtes 
k nouveau de fafon k obtenir la meilleure 
image possible. 

I I Opposing pages with varying colouration or 
— ' discolourations are filmed twice to ensure the 
best possible image / Les pages s'opposant 
ayant des coloiations variables ou des decol- 
orations sont filmtos deux tois afin d'obtenir la 
meilleur image possible. 


Adcftkxial comments / 
Commentaiies suppKmentaires: 

Thit ittffl n fiimad at th« ridiiction rnio chMked below/ 
C* documtnt nt fitoni au uux di reduction indiwi CKkiwin. 
lOX 14X 1«X 







2a X 


Th( copy lllmad h«r* hu bMii raproducad thanks 
to tha ganarotitv of: 

National Library of Canada 

L'axamplaira filmi fut raproduil gr^ca i la 
gantrosit* da: 

Blbllotheque natlonale du Canada 

Tha imagat appaaring hara ara tha bast quality 
possibia considaring tha condition and lagiblllty 
of tha original copy and in liaaping with tha 
filming contract spsciflcationa. 

Las Imagas sulvantas ont M raproduitai avac la 
plus grand soin, eompta tanu da la condition at 
da la nattata da I'aiamplaira fllma. at an 
conformlta avac laa conditions du eontrat da 

Original eopias in printad papar covars ara fllmad 
baginning with tha front cowar and anding on 
tha laat paga with a printad or illustratad Impraa- 
sion. or tha bacic covar whan approprlata. All 
othar original copiaa ara filmad baginning on tha 
first paga with a printad or illuatratad impraa- 
sion. and anding on tha laat paga with a printad 
or illustratad impraasion. 

Las axamplalras originaux dont la couwartura an 
papiar aat Imprimaa sont fllmAs sn commancant 
par la pramlar plat at an larminant soit par la 
darni4ra paga qui eomporta una amprainta 
d'imprassion ou d'illustration, soit par la tacond 
plat, salon la cas. Toua las autras axamplairas 
orlginaux sont filmas an eommancant par la 
pramiara paga qui eomporta una amprainta 
d'impraasion ou d'illustration at an tarminant par 
la darnitra paga qui eomporta una talla 

Tha laat racordad frama on aaeh microf leha 
shall contain tha symbol —^ (moaning "CON- 
TINUED"), or '.ho symbol ▼ (moaning "END"), 
whichavar applias. 

Maps, platas, charts, ate. may ba fllmad at 
diffarant raduction ratios. Thosa too iarga to ba 
antiraly includad in ona axposura ara fllmad 
baginning in tha uppar laft hand cornar. laft to 
right and top to bottom, as many framas aa 
raquirad. Tha following diagrams illustrata tha 

Un das symbolos sulvants apparaitra sur la 
darnltra imaga da chaqua microficha, salon la 
cas: la symboia — » signif la "A SUIVRE". la 
symbols ▼ signifia "FIN". 

Las cartas, planchas, tablaaux, ate, pauvant itra 
filmas t das taux da laduction diffirants. 
Lorsqua ia documant ast trop grand pour ttra 
raproduit an un saul clicha, il ast film* a partir 
da I'angia supirlaur gaucha, da gaucha a droita. 
at da haut an bas, an pranant la nombra 
d'imagaa ndcassaira. Las diagrammas suivants 
illustrant la mathoda. 











■it Lb 12.2 




1G33 Edit Mom Stmt 


(718) *82-0»0-PC 

<718) 2B8-59B9-FC 









*' W« neoKBise that fallliig lilrcr, by low«riiig tha Eaxtera a^-ohugM, 
fnonn our eompetltora in Aiift who hU similar prodOM, wli^ic, cotton, 
•ad otlwr BtsplM, in the marlcets of Btiropo.'*— TOomM B. Betd, SpMiktr 
^tht Hwm ^ Bepntntativet, FortKigUlj/ Bevinp, Jmmt, Uti, 

Sepriitad from the 


rOB ni 



JUNS, 190$ 

rl ■■ . -1 


Nearly a quarter of a century' ago, in the pages of this Keview, I 
drew attention to the increasing difficulty of our trade with more 
than half the world, because of a fall in tlie gold price of silver un- 
precedented in the history of that nietal. My paper was entitled "la 
Free Trade Compatible with the Kail in Silver?'" It seemed to me 
the reply must inevitably be negative. Silver falls; it is the currency 
which eight hundred millions of people exchanpe for tlie gold with 
which they purchase our goods. The Chinaman who used to buy a 
bill of exchange on I..ondon by paying twenty taels, or doUars, ban now 
to give some forty-seven taels, or dollars, for the t>ame gold bill; how, 
then, shall we keep his custom, pending a proceps of price and wage 
adjustment indefinitely protracted and whicli, after a quarter of a 
century, has not as yet made any real progrciss at all? In 188.5 these 
entirely novel conditions of exchange had been puzzling our traders 
for already twelve years, and it seemed abundantly clear that the 
economic basis of the "Manchester School" ' was being stealthily 
undermined; that the free trade, or free ext-lianges, of the Cobden 
era, predicated fixed exthangci', and that while Britisli exports to 
Asia were being greatly hampered, so also with each tresh fall in 
silver the exports which Asia sold us for our gold, exchanged for 
more and more silver. In this way there was being created within 
Asia, by the fall in silver, mill after mill and factory after factory, 
which gave employment to yellow labor in industries hitherto con- 
trolled by white labor. Thus, as Asia exported more and imported 
less she drew the balance owing to her in .-ilver, a "commodity*' with 
us, but with her a money metal. With this metal she established in- 
dustries and paid wages. .\ few years later that ardent Free-trader, 
the late Prof. Emile de Laveleye, wrote to mc "Failing the restora- 
tion of silver the world will revert to Protection." Since 1885, in 
every corner of ttie universe, the symptoms have shown themselves of 
a deep-seated disease, and the worst is still ahead. When I t)unk of 
what we have seen in the F.ast of the industrial activities calleil into 
being by cheaper and cheaper silver, the whole heart faints. Was it 
necessary tliat a vast population in Bombay should be taking Man- 
chester's place in selling cott'ms to China? Why tliat mushroom 
growth of jute mills on the Hugh replacing Dundn^'s? Why those 

'After my prooffi were oent in the title was altered (October, IS^Si. 

•Report of the Manchester Chamber of Commerce. December. 1888: "We 
are led to the conclusion that the principal cause which haa enabled the Bom- 
bay spinners to supersede those of Lanoai^hire in exporting yarn to China and 
Japan is the preat fall in Eastern exchanffe since 1873. ... It appears 
that the geographical advantage enjoyed by the Bombar spinner has been 
leaseninf; whilst his power to compete with Lancashire h..^ been increasing." 

S Wage, in th. W»t and (/,. Cri.i, in i'«kan,M with <k. Ea.t 

not buy » ton oi n iru ^^ ^j , 

conrluikil with these words ; 

p.rln»t injury to 'J" ,V*^' ."'.^.'^r.? ' :^^^^^^^^^ th. further 

£/;T.:^'p.vXut^n"t.r.^SLln■;"^^ -"k "■• '"-^ - -'"« 

diverted. i..„ .ii>>r a l«ri» proportion of the tr«d« 

Already und' th. .rllucn™ °' ^''"P ';^;';h„fel?, which will gT«lu.l y 

...t of th. Ba.. C.U.1 1. And ng for lt«^f °'* "^'JJ j further p.r.r.t.uc. 1» 

S clo«d to W..t.rn »Xl"i; h,..t Brltil" may .nt..l .n Giury to th. 

'j;:„jf':c';„°r'.rrn5'M&.°o', tr«r..t.n't o. ,. u^^^^•^.. 

What we have done m tn.««ulating our own productive power. 

, :p:. -^'rS":nd':vi:;''r':?uCn« ht-r. 

haa >««"<=T''''°«''^,S with U In amounta inconceivable it 
tinent ^f" . " »i^^*'^*„u„'i\le. the mechaniam whereby they 
repreeenta in two hundred '^'""™ """^ , ^ ^^ „, the Occident have 

''?"Vt'd\t; a HonTLngtu" Zl'; which lom,erly ».' 
■o legislated that a Hong jvoug un. 

twenty dollar, to-day ^'^'^^''^^^^L e^^omh^^ are' an 

'"""Jt«d tLr^ no naS^we^M but they c«i de.troy it" 
accursed breed; there i. no n» luu ^^ i~ . , , exchange; in the 
Clearly the pre-requisite of '^'^''"^^t^t^ttroph^Ui Eastern 


:jrVeentire^h»o™en»h«„— ^^ 


the history oi tlie preciou. meb.. J"!* ''"^^f y^jja „'a that ot tte 
""f rr *'';a™V wL^; ^ic^^ ""tlTe Brusael. Monetary Con- 
CSby Batn Xd de Lthschild, in the« memorable word.: 

Gentl.™.n, 1 need hardly J-^UmonMndV'Su °t!oB&« i«.rup 
1. ,.tim.t«l .t «>n.. tl-";""?' °' SXSiy fc. a»;l.tion In th. value of 
without arriving at d.«n to resu^lt. there inayo.^^ r , mon.Ury pani. 

•May, 1004. 

C 900693 

i sold dollHri (or one •overeign) used to purchate three taeli only, and 
icT^ th»i paid the wagei for one day of twenty-flve Chineat mUl-nandat 

WagrM in iht Wvnf and Ihv irigts in Krchat>ij$ uiih the tiimt 'A 

li'Kv to tic Miiu-h with tliv lulu 1 tor. Fruiu-iH Walkfr, uf Vah', wlintifT 
formative intliionci' in ccnmmiicii moy iHThajw mitrtttik < \<n Mill; lit', 
too, referred tliP ratncli.t*in of \\w jirevioun to the tfreat fill in 
ailvfr; tin- fut-tn, liy hi'ld did imt ddinit 'f nrgutin-nl. Trofesw r 
Walker Raid nf tlir <1isii»*lpr: "It lun* dlMocated the clTwtivu dciMBiiil 
of el)(ht humlh'd niiliioii people for our gondii, nnd it uproot.^ Wiittoni 
indu8trirn to replant them i V.v Kast." Thin di«tiTiKni'*hed ecor')nut»t, 
whoKt liook'*, tnthslnti'd Into s-'ven ltiiii;nii;frp. tiic nnw rla^sien in our 
tK-liuoJH, roiulmli'il n si ->rt npecch, at an infonnal dinner pixen hy 
Sir William Houhlswortli, with tlieBO wonlw; 

I ri'K'"'''' <''i« prnblcm of "ilvi-r dm far more tlian any mere prntilem of 
finance; I l»e)H>vi< tlint with ita rittht Httlenient U Itound up tlie very progren* 
nf clvlllxalion fur the Western natinnii. 

And in ppitc of niir diMd) Viofrssort* tlie c|uefitinn of silver munt 
prei»entlv invnde our nchooU, for it is tlie Yellow Peril itaelf. In a 
rceenl Ictti'r to t!ic writor, Senator Teller ptntcd the novel eondition* 
nf thin indii^trinl oonipotition in Die umalloHt compaifl: 

Five ( 
three tacT» _ . ^ , \ . . . . 

wiJIe to-da/ Ave gold dollari buy eight taela, and eiglit taeU pay a c'.ay'a wnire 
to • ot t^er.ty-flve hut tiixty Chlneae mlll-handB: luch ta the nat.irp of t.ic 
protest againHt cheapened silver which auma up our silver phlloauphy. 

There is no industry safr if, with goll prices and wages rising fait, 
wc are to continue to ficll eilver to China at two Bhillings an ounce. 
Said Mr. Kopnoh, of Shanghai : 

SiSvr paid Chinese labor has driven ^very European tailor and flreman 
from the derlts and stokeholds of foreign vessels plvlng on the coaat of China, 
and the premium paid by gold countrfex lo silver labor will crush the efforts 
of the .V -Vinist to reap the pi fit of his toil in the East, just as it bas 
vanquished the seaman. 

Until China has no tontrolled the production and export of many 
of our great staple industries, cotton and iron and leather, that slie 
has saturated her currency with standard silver coins, accepted with- 
out question by her four hundred millions of people, which coins again 
can not be distributed over China to raise prices and wages u.itil she 
has made real progress with a railway system — until that remote 
time comes there can be no such rise jf wages and prices in Asia as 
will adjust values between Europe and Amer.'.ea on the one hand, and 
Ada on the other ^ and in the meantime there is a prospect axnouni- 
ii:g to a certainty of . ch a further rise of gold prices as will involve 
panics and e.Tchange crises every few years. It is this which maken 
the exchange problem so infinitely ii-iportant at the present time. 

Briefly the position is this. The immense production of gold 
from the mines is depreciating our Western currencies. To discover 
y such rise of prices as occurred betweeT^ 1896 and 1907 we should 
have to revert to the reign of James the T irst. In 1896 sixty-one 
sovereigns would purchase as i uch as eighty purchased in 1907/ 
and it is quite certain that the conditions of gold supply are such 
that we have scarcely crossed the threshold ot the new era of tising 

*BauerbM)k'B Index Number, 1896, 61; 1B07, 80. 


4 Wages in the \Vr»t and thf Ouu in SMkangts with Ik* Ea$i 

prictw. In thu lut'unil quartur ol tlie acvvnUt-ntli cuiitury, bt>iauie 
of th« inHatioii of our i-urrencivi hy Uie trvanuru tniY« uf tin* iiiidm 
of Hiilivia and IVru, tlu! vuluv uf au av«ra(j;i< arre of KngI 4)1 land 
f\mf from Si. to V5/., wageM row from lialf a cruwu to twi-lvi otiilliiigi 
a imiVt wheat from eight sliillingi per quarter to over thirty. Adam 
Hmith writoH in hia Wtalik 0/ Nations of thm great fall in the value of 
our h'gal'tpndcr money: 

Th« (llM'ovpry tif tli* aliiindant mlnti uf Aimrica Httiu nt have liMn tha 
■oil «auMi of i\w diminution In tlw falua of ■ilvir in prupcirtlon to that of 
forn. It is ai-rountnl (or, arcontlnKlj', In ttia Mnw niann«r \>y tvtrybodji and 
tbara navar hat bavn any uiHputa altnar about tha fart or about tba eauaa of it. 

It in almost inevituhlc that thvro ia in waiting for thi^ nuxt >{fnura- 
tion a riiH> of priccti hardly U-mi lennattonal, I[k>cuii«v of thv fxct'aatve 
ahundanco of the new gohl. It tiecma but the other day that writen 
on current-y were bahiiu-ing tht-ir budget with a yearly prwluct of 
only t'ightii'n niillionH; ^ tliiH year the produc-tiun will Ik? quite ninety 
millionH. The yii-ld of the- iiiinoK doubled between IHKU nnd 1896, and 
again doubled hetwi-en 1H!I(> and I'JUO; and from the uttermost parta 
of the earth come freitli annouiitementa of important lUwoveries, and 
of chemical and mei'tianicul inrcntiona, which tiecure profitable reaultit 
from lower and lower ^radett of ore. But in the cam* of the white 
metal the position is (niite <lifff!rent. The pr<Mluction of silver bIiowb 
no conitiderable increaiie: alternately sta.ved and surfeited by the 
vacillating policies of HucccNfiive Finance Ministers the "managed/' 
and terribly midmnnngefl, t-urreiicy of India, which was formerly the 
conduit through which (tilver flowed into China and the Malay Staten, 
disallows any real advance of silver prices in China. Every authority 
agrees that, except in a few cities and in the treaty ports, the purchas- 
ing power of the tael, now ut eight to the sovereign, ih Htill what it was 
when it exchanged nt three to the sovereign. Wb'-t. then, will happen 
if our gold prices double during the next fi'V ye . and silver price* 
remain comparatively immobile? Clearly vJrieiical exports, magne- 
Clzed by our great rise of prices, will be thrown upon us in greater 
and greater volume, and will more and more displace white labor in 
the West. In 1898 the Slianghai Chamber of Commerce passed the 
following resolution : 

That in due courae ttia productii of Atlatic cheap labor will prove fnr mora 
injurioua to the intereata of the wage-eamera in Kold-ntandard countries than 
the preience of Chinefie coolies, and that unless silver is remonetized, protec- 
tive measures wilt have to be adopted to exclude from gold-standard countries 
not Oriental laborers only, hut all thone manufactures alto which are sub- 
sidized by premiums < premiums on gold in Asiatic currencies). 

The fall in the gold price of silver is merely another expression 
for a rise in the gold premium in every country which has a silver 
currency. The embarrassment of our traders in exporting to South 
America and Itufisia, countries with paper currencies where the pre- 
mium on gold fluctuates from day to day, is told on every bourse. The 
exchange difTiculty in the case of Asia is not less, but is much greater, 
and the result has been, beyond words, disastrous to white men. 

•1874, 18,160,0001. 

Hoyr. 1.1 Ikt Wf„ and Iht Vriti, in Ki,h,i,„j,. w,lk Ihr Katt S 

Of ,mh» n«l„ri. i« ti'.. «„n,>„ii.. on.i. thruiiKl, wliid, llu. ttwt ,. 
IwwiriR. W hat »oi.dcr tlitl w. are .^„„.lic <,r inlidd ! What wnndiT 
h. r«. ..,. 1,„„K" Im. K,,„,. l,v .1,,. .„ar.l w,.l, wmk.^ ..k1..„k,,. a...! 

i»'«l l"'"'" "' " " " ' '*'""' '■■■" '""'•••• ""' '"""• "I'"'' ••"■-' 


The grwl .liver iuue haa .luiiihcrwl n,.w i.r liflwii .,.ur- and 

dr".,lnd t„ :' "',"""' «"'''• " »"-' """■' l'">« "■"■'■""I fn,,„ 
fnT, '" l''«f ,"" "«" "•"'"■■y- ""> it i« -are t,. ,,r.,lict that 
to the at land th„ „,.,„,h|y i„d„ , ,h,.r. of Mr. Sa ,.TlH,k wM 
b, aw.,,„| ,„h „„ eager and al„„«t a ,,u„>f„l mter..,, r .. a, 

placemen of wnie ho.„e indu.try .„d it, «tabl„l,„,cnt in the E. t 
No conceivable tariff would "protect" our Worker, again.t .„ "a f. i 
to ., vcr a. that of I8li3-1> „r of l»(.7-«. For reason. aW, L" Z 

a^d Ch nlZr,T°"''° "'^ 'T"' "■™'' "' l'"l»''"'i"'> »i'Mn ln.iia 

^„ril^, ''^.° ""'"■'■""■ '"'"•' "' •,.; but it can 

■hnCamnir""^ ""."' """« KoHKcxchanKe i, b.,1 towar.l N:." 
■hilling, and he rup™ at, or near, two .hi ng.. "Binietalli.n, " or 
.ny «heme that i, believe,! to require i national ag" ,^'t, " 

'n^?hr'' ""'' '",•"-"»""" -" ™'y »'- obstruct and delay «™e 
poMible measure of reform. The Pritiah "know-nothirg" view a. to 

»iew, and in a f.v worda. Before 1873 the world of trad. ,i„ved 
flxed e,ch,„ge, between gold and .ilver communitiea. S. g„ 
France wr„W exchange her gold for silver at an ounce of ,^o 

4^ 2^- ■» (?old leu only the co,t of .ending it to Pari,. But we can now 
«e that France wa. merely the money changer. It wa. not in the poweT 
of France to ina.ntam this exchange, for even a few year., without Z 
ooperation of (ireat Britain. The ability of France depc:nd"on (1) 

in Loudon. If London merchant, trading with China or Chili threw 
wa. at once forwarded, say to Bombay, to l» exchanged there for 
ZT:\T '""'^-i'" ''°'''' "' «"''' '""»• ""•! "•>" ™^h fifteen 
Bombay a draft on London for an ounce of gold. Space will not allow 
.Tve^aS'lr ^■^■^;"'^,7*'''.« '"ough it is. why, a. Chevalier said 
.liver, after the great Cahfomian and Australian gold discoveries wa. 

new gold reachcl Eurow and raised price, there, Asia's export, at- 

ttf^f* * r '''''" ^"'"^ P"*^'*' "»"™«i into Europe, and to 
hquidate Asia, mcreaaing balance of trade the legal tender silver cur- 
rency of FVance paswd by wholesale into the melting pot. Thu. every 
ounce of the new gold evicted from France fifteen and a half .unc« 
of coined .ilyer. The silver to the French currency w«, thu. in 

( Wagm in the Wat and tkt Cri$u in Bxehanget with the Eatt 

Chevalier'a happy phnee, the "parachute"; it protected Europe from 
that inflation of prices and that fall of gold from which we and 
America are now about to suffer, and suffer grievously. 

I believe that we "Bimetallists" are now prepared to admit that 
Great Britain did all, and even more than her share, before 1873 to 
secure fixed exchanges, and that to ask her, as we did, to continue 
free coinage and silver monometallism in India, flm a free-gold mar- 
ket in London, pltia a mint open to the free coinage of some unnamed 
legal tender silver coin in London— such a demand was excessive. 
Had the Indian rupee currency been minted in England and not in 
India we should have seen this quite clearly, and so would the other 
nations, America and France, their traditions friendly to silver. We 
should have had in London a mint open at all times to the free and 
unlimited coinage of silver. That fact would have silenced our critics. 
Is it, then, possible to revert to the status quo ante 1873 1 It seems to 
me quite impossible; no one would now know where to begin. The en- 
tire science of mone.. is repellent in the last degree, and rather late in 
the day our sense of humor stirs at the idea of creating not merely a 
national but a cosmopolitan opinion as to such an issue. The question 
of exchanges rated by international comity is dead and buried. But 
the prospect of patching up exchanges at least for a generation to 
come is far from hopeless ; indeed it is not to-day really difficult, and 
if in this way we can get over the next quarter of a century we may 
probably also have survived the era of excessive gold supplies and in- 
flated prices. I'hus 1933 may find gold prices again shrinking, and 
with China equipped with railways and with a respectable currency sys- 
tem, her wages and prices, as also those in British India, may be rapidly 
advancing; thus the racial danger of the present competition, fostered 
by rising gold prices and falling silver exchanges, may have been 
averted. There is also the prospect of an immense and most beneficent 
absorption of silver by Africa, as to which I will refer later. 

The method of supporting and raising Eastern exchange might be 
as follows: In 1888, after sitting for two years, a Boyal Commission 
on the Currency issued its report. The evidence, read to-day, is of 
extreme value and interest. Of the witnesses examined few now sur- 
vive ; they were for the most part merchants and bankers who, already 
men of affairs and experience in 1873, knew the extraordinary con- 
venience of that accidental fixed exchange with which they had pursued 
their trades. The Boyal Commission split up, as we should expect, 
into two camps. The monometallists signed Part II, the bimetallists 
Part III. Part II, paragraph 137, reads as follows : 

We think that the best suggestion in relief of the tension of the existing 
situation is to be found in the lasue of small notes based on silver. These might 
become the substitutes for the half-sovereign, and if they came into generml 
use they would afford a remedy for those difficulties in relation to that coin to 
which public attention has been prominently called. 

Twenty-Bhiliing silver notes might also be issued. If these were put into 
circulation they would probably naas largely Into use without any alteration 
of the law of legal tender. The Oovemment might issue these upon condition 
of retaining silver capable of being coined into an equal number of shillings. 
The mar' bus opened for silver might check the decline in price of that 
metal, b» producing an economy in the use of gold, (bigned: Herschell, 

C. W. Fremantle, T. H. Farrer, T.«onBrd H. Courtney.) 

Wajfu in the Wett and the Crieie in Exchanges with the Eait 1 
In P«rt III, paragraph 36, the Bimctalliata any: 

Sri,^™.^ 2VV 'T!^ ''?" "" ««"' «'"»?«■ '» the relill™ value of the 

■ ™;!,!>!f.l / "'''i °' "" !"'""■ •*' "" ■•"'" time we approve the r^m- 
fiSi. n.l ,!;i,''°','f'*?."J°v'"- l^'S^' I*"'" Mallrt, Arthur ^°. 
Balfour, Heary Chaplin, D. Barbour, W. ft. Houldeworth, Samuel Montagu.) 

In 1891 Mr. Goachen, at that time Chancellor of the Exchequer, 
went to Leeda, and he made an impassioned appeal, if such an adjective 
applies to one by nature so cautious and critical; he displayed, how- 
ever a really desperate anxiety as to the state of our gold reserve. 
Mr. Ooschen said : 

I ha™ alBo considered the queation of the iasue of ten-.hillinB notea aiiainat 
CommiMlon,- and there are no economic obiectione to eucSa courie f b. 
half-eovereign is a very expensive coin, and Wsovereign. are Suited iS 
enormous ma.,ejL I .m told that in the payment of wLernote. for teS 
shiiling, would tx extremely agreeable, a. ."vSiding a greaFdeal of caJriaS 
and a great deal of counting {Time,, the 29th of 5.nuTu7, 1891) ^ 

We Silver men were much disturbed by "this speech, and the Chan- 
cellor received our oeputation at the Treasury a few days later, intro- 
duced, if I remember rightly, by Sir William Houldsworth, member 
for Manchester. I have the notes of the objections I raised, which 
pointed out that if, as Mr. Goschcn proposed, he brought in and im- 
pounded the half-sovereign, a full legal-tender coin, buying it with s 
non-lcgal-tender note for four half crowns, he would contract the vol- 
ume of our standard money by some thirtv per cent, and induce as 
was mdeed his purpose, a further fall of prices; because it is the legal- 
tender money, the money whidi can be drawn abroad through the 
action of the exchanges, which supports prices, and not the non- 
meltable token money. Under cover of this fall of prices he would 
have turned the exchanges in our favor, would have protected in its 
cradle stage his second gold reserve, the impounded half-sovereign, 
while the better exchanges were bringing us additional gold from 
abroad. It was a very clever, perhaps even a sound proposal, but we 
thought that the farmer and merchant were being sacrificed in that 
year of semi-panic to better secure the banks. I have since come to see 
that there are crises— and such was tlie crisis of 1890— when finance 
must be nursed to protect trade. As a rule it is the other way; sound 
trade secures safety to exchange, and thus to finance. It was quite 
evident that the vehement opposition we offered had impressed the 
Chancellor of the Exchequer; and hard on our heels, as I have only 
lately learned, came yet anotlier deputation, small, but very important, 
which included Sir Hobert Giffeu. The protest of this deputation as to 
his silver-secured token notes was not less emphatic than ours. Mr. 
Goschen himself— I may say it with all respect— knew more about cur- 
rency and exchange than Sir Robert and all our deputations rolled 
into one, and he should, I think, have persevered; but with many fine, 
rather superfine, qualities he perhaps lacked decision. In any case, 
less than twelve months later," in addressing the London Chamber of 
Commerce he withdrew the small note proposal in these words : 

• Only Sir John Lubbock and Mr. Birch dissented. ' 2d of December, 1S91. 

8 Wagct in the Weal and the Crisit in Exchanges with the East 

You will obMFYe that 1 have mada no alluilon lo tha Un-ihllling notai. 
(Hear, near.) I took lucli palm a> I could lo aaeertain whether teuahllliiu 
note, would be acceptable to the community, and the reiult I arrived at wu 
this-^that they would be extremely unpopular In mont parts o( the country, 
but that in Lancaahlre ... they would value the ten-abilling notes not 
entirely on account pt the note llwH, W becauie of it being «>me recognition 
ot the principle of illver performing a larger part In tha currency. 

The Chancellor in this matter had strayed into a zone swept by two 
fires. These note issues, by raising the Eastern eichanges, and thus 
securing the prosperity for the time being of I.«ncashire, would have 
disbanded the Bimetallic League. We at that time were full of confi- 
dence and hope ; not until two years later were we to find our Waterloo, 
and again at Brussels. But, more important still, .Mr. Ooachen was 
under the guns of "the business man" I Another Chancellor, a greater 
mind still, had learned that lesson. Twelve years earlier Mr. Robert 
Lowe wrote: 

It neeme .Irange to say so, but it Is nevertheless true that there is nowhere 
so much difficulty in obtaining a fair hearing as in matters of finance a little 
out of the usual course. The parson, as Is natural, prefer, his old >n<i»ii»imi<> 
to your new .umpsimus. The lawyer often listens with impatience to the 
notions of an account more enlightened than that in which his code was 
iramed; but for thorough, unreasoning, and dogged obstruction commend me 
k! "i-hJ ..."/ *!■ .? .'^ rcsnected man of business, especially if the business 
». , ''5"!. ?y '"!»,'. "Ingle fact he becomes an oracle. Why should he 
waste his time in thinking when the balance at his bankers testlfles for him 
that he is entirely master of the mysteries of his profession! Why tire his 
ges with reading when he is already master of all that has and all that can 
be said on the subjectt To try to impart to such a person a new idea is a sort 
of insult 1 for It Implies that there is something left for him to learn, which 
as the mathematlcianB say. Is absurd. H it be difficult to argue with the 
master of twenty legions, it is equally vain to argue with tEe master of 
twenlj clerks, ff you doubt this, look at the reception which the currencr 
question received from persona who are engaged In actual business. They 
professed they did not understand it, which was, no doubt, perfectly true- 
but, not understanding it, they were equally sure it was wrong lie pro- 
posal was no novelty; it was only a nlvelty to them.' ' , 

Thus, then, there was put to sleep in the willing anns of London's 
Chamber the almost unanimous proposal of a Royal Commission,' of 
which proposal the greatest authority on exchange finance of our time 
said, "there are no economic objections." The man had come but not 
the time. The question of the gold reserve both in I«ndon and New 
York overshadows to-day all others in importance. Tf gold were pur- 
chased in both countries against the issue of "Goschen notes," and if 
these were circulated, as Mr. Goschen thought possible, to a maximum 
of a pound per mpiia, a "war-chest" in Washington of five hundred 
million dollars of imearmarked gold, and in London of forty million 
sovereigns, might go far to protect the two communities against ex- 
treme speculative excesses. The silver purchased to secure these 
notes, even were the purchases spread over the next fifteen years 
would amount to six hundred million ounces, and under con- 
ditions of such demand the rates of exchange with Asia would be 
restored presently to something like their old gold point.* The early 

• Fortnightly, July, 1879. 

•In 1907 the Government of India purchased eighty million ounces of silver 
out of a total production of 170 million ounces, of which the silversmiths take 
eighty; but in 1908 that Government purchased a merely nominal amount, and 

Silver :u-t-oi-ilingly fell more than 8d. an ounce. 

Wage) in the Wett and the Crisis in Exchanges with the East 9 

purchMei of the half-sovereign would be with a note for ten shillings, 
the silver in b shilling being now worth only fourpcncc, the half- 
•overeign wonid cost three-and-fourpence. But I have come to see 
both at VVashington and Westminster, that this measure of safety for 
trade and finance is quite past praying for. In England the bankers 
will never agree with the merchants; while in America, I am told on 
all hands, that no Secretary of the Treasury could withstand the deter- 
mination of Wall Street to raid the new cash reserve. But both in 
America and in England, and particularlv, I am assured, in Germany 
there is a rapidly growing recognition of the disaster which has fol- 
lowed the silver slump of 1907-1908, and in both countries, or in all 
three, it wonld now bo possible to attract the public car it the propostd 
■mall-note currency wonld both liquidate the cost of some great 
national undertaking, giving a huge profit to the revenue, and at the 
same time patch up the rate of Eastern exchange, and so stimulate our 
export trades as to bring back employment to our workers. Such 
great national undertakings there are at the present time ; in England 
Old Age pensions, and in America the Panama Canal. If we ear- 
marked the profits of the proposed small-note issues as to which "there 
are no economic objections," for these national objects, their carriage, 
both in Great Britain and America, in our note cases and cash boxes 
would seem a national duty. The new pension payments lend them- 
selvM perfectly to the proposed note cureney; they cannot be paid in 
standard monev, and if the Treasury were to issue these "crown notes" 
to the post-offices throughout the country the public convenience would 
be subserved, and the profit at the present price of silver would be the 
entire difference between twenty-four pence and sixty-six pence on each 
five-shilling pension paid." The profit is so enormous that the note 
isane might be treated very liberally. It should be a beautiiul note, to 
be burned, never reissued. To enlarge the field of currency for these 
notes the half-sovereigns, wasteful coins with a large friction surface 
should be gradually collected as they come into the post-offices; and it 
might be well also to reduce the pound note issues in Scotland and 
Ireland, m this way creating a void, to be filled by the crown notes. 
I robably in a few years the custom would obtain, as in every other 
country enjoying n small-paper currency, of carrying more crown 
notes and less gold; thus much of the gold now in our pockets and 
tills would gravitate to the bank reserve, which was indeed the chief 
aim of Mr. Goschen's proposal. 

I hope the reader follows that the proposed notes are not legal 
tenders; that they in no respect differ from sixpences, shillings, or 
half-crowns; that sixpences, shillings, and half-crowns already circu- 
late at a value one hundred and fifty per cent, higher than their metal 
value and to the amount of some twentv-five millions sterling; and 
that the only reason the Mint does not coin more small change is that 
the people will not overweight their pockets. Xot only, then are 
there no economic objections to this most profitable note issue, but 
there are great incidental advantages : it would be very convenient for 
remittance, saving bankers the annoyance of myriads of very small 

" The mint iuue price for silver bullion Is 6e pence per ounce. 

iO Wagei in the Wat and ikt Cntit m Exchanges with the Eait 

checks and their ledger and pasB-book entries, while taking the place 
of small money orders, and thus saving the time of the public and of 
the post-office staff. Again, to the extent these notes increased the gold 
reserves, so also would they increase the loanable capital, and thus the 
profits of the banks. In times of crisis and panic, too, a large volume 
of this currency, unlike gold not exportable, but remaining in the 
pockets and tills of the citizens, would do money's work, when gold 
had gone into hiding. Had the United States in the panic of 190T 
possessed five hundred million dollars of these fractional currency 
notes her sufferings would have been greatly mitigated, and her drain 
on our gold redui. d. 


In the preparation of this paper the chief difficulty remains, and 
I propose to shirk it, to the extremest limit possible. That is the 
more perfect way for one who, like the writer, regards the work of 
England in India as perhaps civilization's brightest page of ell. 

But there has been a blunder, amounting to one of the great acci- 
dents of history, and its consequences both to China and India, and 
also to the West, have been monumental. I refer, of course, to the 
closing of the mints and the establishment in India of a so-called 
"gold standard." 

If the "Goschcn plan" was workable without reference to the pres- 
ent "managed" currency of India I would omit all reference to India; 
but the first effect of silver purchases by two great nations, or three, 
on the scale contemplated would be to bring silver sharply to forty- 
three pence an ounce, at which point the ariiflcial rupee of the Gov- 
ernment of India goes to the melting-pot. The Secretary of State 
for India dominates Eastern exchange from the Victoria Nyanza to 
Vladivostock, from Borneo to the Koof of the World" ; never was such 
an autocracy as his. And if he still sells his rupee bills for sixteen- 
pence, then, when silver has touched forty-three pence per ounce, by 
no conceivable means can silver rise farther, or the rates of exchange 
with China advance beyond that point. That is an axiom of exchange 
to-day. But if he will agree to reopen India's mints when the bullion 
price of silver reaches forty-three pence, then it becomes worth while 
to persevere through that sad and sun-baked desert, which may yet 
lead to the green oasis of higher exchanges with all Asia. 

At Washington a Monetary Commission is in session. Since our 
Bullion Committee reported early in the last century no body of men 
have been freighted with a greater responsibility. But this Western 
Commission is in the matter of silver absolutely at the mercy of the 
Government of India. What ■ il Calcutta do should the metal value 
of the rupee equal 'Is rate , exchange? "Is it possible to procure 
through the India Uovernment some reply to this question? Be- 
cause we are quite certain to meet an almost insuperable obstacle in 
the attitude of that Government, and at the very outset of our inquiry." 
With these words Senator Teller, the Nestor of that Commission, 
concluded a letter to me last October. Hecall that in 1897 the Gov- 
ernments of tlie United States and France had, by the mouth of the 

Wages in tht Wett and the Crisis in Exchanges with the Eutt 11 

Wolcott CoDimiMion, asked this same question of the Government of 
India. It was no biraetallio pait, as some people were led to suppose. 
Prance said to India : "We admitted silver to free coinage before 1873, 
and you before 1893; will yon do it again if we do?" The other 
points In the proposal were mere surplusage, matters to concede. The 
two great Uepublics had said: "We recognize that for you, India, to 
revert to owen mints and free automatic exchange singlehanded would 
be difficult, and Hesumption is always painful; but will you do the 
huneat thing by your people, and again coin any one hundred and 
eighty grains of silver for bearer into a rupee if we jointly intercept 
the load of arriving silver by opening our mints to all comers V Such 
was the offer of the Bepublics. It said to India, "Can we assist you 
back to the paths of honest money? All white workers are concerned 
to secure a rise in the rates of exchange with China. In tampering 
with your currency you have tampered no less with that of the Philip- 
pines, China, and Cochin China, and you have frightfully subsidized a 
competition which alarms us— the competition of the Mongolian ant- 
heap in our markets. Will you who belong to the polity of Locke and 
Newton, to the homeland of honest money, but who have strayed from 
the fold, come back, if we make the gate easier of access ?' Such was the 
proposal of the Hepublics. The courage of it ! The comity of it I And 
the reply was the reply the world has been familiar with in the years 
gone by in the mouth of the Treasurer of some bankrupt South Ameri- 
can State. "We dare not have recourse to honest money," says the River 
Plate, "for how then sh"jld wo export our wheat?" "Or our coffee or 
rubber?" says Brazil. And over the signatures "Elgin," "George White," 
"James Westland," tlie civilized world read the reply with amazement: 
No honest rupee for India; the rise in exchange "would kill our ex- 
port trades." " Such is the official view of free exchange for India. 
India's export trades live because of an inconvertible token currency; 
she is to continue to buy ninepennyworth of silver, coin it, and call it 
sixteen pence. "We will sell in two financial years, 1906 and 1907, 
over four hundred millions of these assignats; we will make such a 
profit by selling them to our people that we shall have no more revenue 
difficulties." Such is the dispatch made memorable by a British 
Viceroy's autograph. But why, Burra Lord Sahib, pay ninepence for 
silver, and call it a rupee, and sell it for sixteen pence — a mere pnJflt 
of sevenpence? Why not buy tons of lead, and stamp them, and sell 
lead rupees at your rating? What point is there in a full legal-tender 
coin unless it is meltable, ,-.nd is thus the money of exchange, the 
money that assists to keep its country on the same price level as its 
neighbors ? Why be at the expense of silver when lead will do ? It 
can not be to secure a trickster's confidence in dealing with three hun- 
dred millions of our wards, nearly ninety per cent, illiterate. "Forced 
elevation of the value of money is fraudulent bankruptcy," so wrote 
Jeremy Bentham, dear to Eadicals. When, in May, 1898, it had be- 
come evident that the gold standard might be imposed. Sir Robert 
Giffen concluded a letter to the Times with these memorable words: 
The highest political isnies are also iDvotved. One of the most dangerous 

" Simla, Iflth of September, 1897. C. 8667. 

IS Wages m ike West and the CHsi$ in Exdumget with ik$ Ea$t 

thingi lor a OorernnMiit to do ii to tamper with the peopli'i iDomy. Is it 
Mrtaln tb«t tba iDdian Oonmmcnt cin go on lonj; with iti proMnt Idcu 
ragardlQg money without produeing tht gravest eompltMtiotts in th« govarn- 
m«nt of India Itsslf T 

Let me get aw&y from this very dangerous ground, from the 
*'famine-breeding rupee," from the rupee which, although now depreci- 
ating by reason of the inflations of 1906 and 1907, yet costs nearly 
two tolas instead of one tola, with all the "little loaf" consequences in 
time of famine. \Vc had b«tter turn down that page. But let any 
intending official apologist just ponder first on those words before 
coming to the defense of the gold standard. It is greatly to be desired 
tliat the issue shall never be argued in print. But the official ignorance 
in higl places which led to it — this is matter for fair comment. 

Announcing the gold standard for India in the House of Commons, 
Lord George Hamilton, the Secretary of !Uate for India, said (Time$, 
19th of May, 1908) : 

Believer as I am in bimetallism, having been a convert twenty-flve years 
ago, I had a good deal to do with the organization which has since developed 
itself. . . . What is the plea upon which bimetalliBts have appealed to 
the woricing classes of this country? Is it not that the ronatanl fall in the price 
of nlver raiteg pricta in thoae couniriea where ailver ia the atajutard, and that 
in consequence an impetus and bounty is given to the export trade . . . T 
Everyone who exports produce from India like* a falling rupee, for the rea- 
son that it raiaee prices. 

It would hardly be possible to pack more "valuable misinformation'' 
into half a dozen lines. At the time Lord George spoke all the 
official "index numbers" issued by his Department show (1) that 
rupee prices were lower than in 1873;'^ (3) that this is the cause of 
the impetus and bounty; (3) that just as nothing stimulates a coun- 
try's exports like a fall in its prices, so nothing checks them like a rise. 
These points are the mere alphabet of exchange, and yet they are 
beyond the ken of a statesman who has since left his party because 
of economic doubts. Well did Mr. Gibbs entitle his Bimetallic Primer 
"A Book for Babes and M.P.s." 

It is easy now by the light of events to detect the fallacy which 
underlay the entire Hamilton-EIgin-Westland experiment. They be- 
lieved {vide Govern. rient of India Dispatch, September '5, 1897, para. 
14. C. 8667) that they could work through to safety and a gold standard 
while maintaining their existing rupee currency as full legal tender, 
and this because the United States and France had gold standards 
with masses of silver dollars and five-franc pieces of full legal tender. 
But this analogy, preposterous at the time, is now seen to have clean 
gone forever. In America and France all additions to their currencies 
are in the metal of their standard, whereas in India no addition to its 
currency is in the metal of its standard. 

Let us now watch our Alice at w rk in that Indian Wonderland. 
Sir James Weetland, perfectly in the twilight as to currency questions, 
allowed himself, not unnaturally, to be controlled by certain civilian 
influences. The rupee had fallen because of the closing of the mints 
to a fraction over a shilling; how were his commercial advisers, after 

"See Blue Book, Prices ami Wagea in India, 1907, pp. 147-lSS, 218-239, 
252. 253. 261. 267. 

Waga i« tke Wat and ike Criiit in Exchanga with the East 13 

a life of pro«p«roni tiport trading fostered by shrinliing er;cliangc, to 
return home bringing ttieir iheaves witli tlicm? Clearly a few vean 
of a gold standard wae the remedy, and then let wme other fello« 
"carry the baby." Melt up the rupee currency, sell it for gold, India't 
prices will fall ; thus you will both create a currcmy vacuum and also 
increase her balance of trade. To. take the place of the melted rupeei 
and to liquidate the trade balances sovereigns will rush in. Such 
was the policy. So the word went out to ofticiil India to declare the 
Indian currency "redundant"— a nice mouth-filling word, like unto 
Diana of Ephesus. The sign, and the only sign, of a redundant cur- 
rency (the sign in India to-day) is a rise of prices, wliercna all the of- 
ficial "index numbers" in 1898 showed that prices were falling. Man- 
chester was to be "st,uared" by an artificially high exchange (an 
exchange to-day ninety per cent, higher than the bullion point) ; this 
would protect hei cottons from the general fall of prices at hand. 
It woult have been well for Lord George had he pondered the mag- 
nificent reply of the Treasury in November, 1879, to a previous appeal 
from the Government of India to permit a gold standard the reply 
should be printed in letters of gold on the walls of the India Office: 

:. .ppMfs, loo, th.t the aovernment o( India, in making the P"«"' P™' 
DOStl iMthemwlie. open to the same eritlcLmi » .re made upon Govern 
K which have depreciated their currencies. In K«.er.I, the object of .»c.. 
Oovcrnmente liai bejn to dimlni.h the amount they have to pay to their 
S torT In he 7e,ent ca» the object of the IndU Government .pp..r. 
S„ hi tn ncreare the amount they have to receive from their taxpayer.. 
'" My Cd. f"il t^ TZ reaf difference in the ''■•"''" "M'^l.Triv:?;' 
action. . Th» Government Kheme may relieve the Indian Govern 

ment Jnd other. \vho d«ir. to remit money to E»e'«»;^. J"' ';■! 'f' !' "" 
ta given at the expeni* of the Indian taxpayer, and with the effect of increa. 
ing every debt due by ryot, to moneylender.. 

I pass over a Commission, the announcement of which was the oc- 
casion of a protest in the Press quite unexampled in our time, and the 
conduct of that Commission, which elicited from one of the leading 
organs of the "gold" Press " the following statement over the signa- 
ture of its editor. The Government of India "packed the Commission 
most carcfuUv, and it appointed a chairman who stopped at nothing. 
Still another Committee was required to offset the protests which 
came in from every portion of the Empire and from every organ of 
public opinion." This Committee, the I'owler Committee, declared 
of the evidence of its own selected witnesses: 

So far as the of the Government of India were intended to nMUre 
theronMence of thrcommercial community they have failed in their effect. 
Siei proJS..!. have not been supported before u, by the repre»nUtwe. of 
the commeVcial and financial intere.t. connected Wltf. India, nor, indeed, by 
any of the independent witne.M« whom we have examined. 

Bead the evidence given before the various Commissions by the 
scientific witnesses, such as Sir Robert Giffen and Prof. Shield Nichol- 
son, or by the financial witnespcs, the late Lord Aldenham, Mr. T. H. 
Whitehead, Mr. Jackson of the Hong Kong and Shanghai Bank, by 

-SlolMl, 16th of July, 1898. 

-Vidt an important .peeial article on "Indian Affair.," Time., lltb of 
Jidy, 1898. 

14 Waga in M« Wetl and Ikt Crm in Sichangu w<tk iki Sail 

Sir Thomu J«ck«on and Mr. Stephen Halli, contra.t til thii with the 
evidencei of -impnietribl. ignorance" in the intereitod or the 
official claa., and the position becomei clear. The hug. premium 
to which the legal-tender currency of India haa gone over ito meUl 
value haa deitroj M a machiueiy which ia comparable in importance 
aa a diatributive agency for trade to, the very railway, themwlvra. It, 
owing to a rue of gold pricea in Europe or to tlie failure of wheat 
harve«U in Bunia and the United SUtes, India's ciporta for a aeaaon 
were greatly swollen, ahe became a voracioua abiorber of lilver. Thua 
Indian pricea, flrat in Bombay, Calcutta, Madraa, rose; thia rise now 
made India an attractive market for the exports of China and the 
Malay States, w> that China began, through !icr coaating trades and 
over her land frontier, and through a hundi 1 different conduita, to 
draw away and redistribute as bullion the redundant rupee, unlocking 
and stimulating other trades i-, a thousand new districts. And again 
as slack seasons succeeded in India to seasons of great trade activity, 
then the surplus rupees were melted up and "bangled," raising the 
value of the rupees which remained in the active circulation. But 
since 1893 India can no longer give off silver through her exchanges, 
nor convert her rupees to bangles; the flywheel of her exchanges broke 
with cloaing of her minta. 

We now come to the era of the gold standard ; tc tha continued 
melting up of "redundant" rupees; to famine yeara memorable for 
loa price; even for food. By the winter of 1897 the rupee currency 
had apparently ceased to be redundant, for M.. Vicary Oibba declared 
m the House of Commons that rupee loans had recently been arranged 
m Bombay on the security of gold bars, at two per cent, per month. 
The next stage, when gold is to rush in and fill the vacuum, ia elo- 
quently covered by a dispatch from the Government of India to the 
President of the Bombay Chamber ' Commerce. 

^J^ OoYernMnt of Indl. have never concealed from ehemielvei the incon- 
mwXuUH™ *J,f''' •'•"''"'•"I'kl' 1" not accompanied by .. elTectlve 
jold clrcu Ution, Hid they are In full «»»rd witii the view thai a more general 
u» of gold among the people would etapllfy the ta,k of directing fman- 
Mjd currency. It will be within the memory of your CommltS that a 

??2:lnri« Z'ij.","SS'"' "'•■;';'="iL"™°'»°''> "•■"•*' ^ 1»00.01. ih! 
TreMuriei the Port Office, and the Presidency Banks cooperated In special 

Ei:^ LIJ'l'J" m,"" °'. »??''■ ""' " "" "t'maled tfiat. for the time 
being shout IX millions sterling were thus put Into the bands of the public 
But there Is no evidence that the populsrity of gold was thereby increased: 
SLi . '^Hi't'^'J' ''/T ""' "» «"•*■ '""' "'"»" '•■>■" promptly "ami 
^.t'^/'"..''"!^' *"^ "" '"•""■'es, and the experiment h.d ultimately to 
to abandoned. To press a circulating medium upon the people is more iLu 

.^n.^*,"" .'° f""""" "" *"°"°* '"' "• Popular confldence in «■ un^ 
famlUar form of currency must he allowed to develops In its own way: and 
tbeGovernment are fully convinced that any oOclal attempt to fofci it> 
gimrtb will Inevitably do more harm than good. 

Thus far the era of contraction and gold imports; that "intereat- 
mg experiment," in the words of the late Lord Farrer, or in the words 
of the r«f»M, "financial rainmaking." These methods of the contrac- 
tionista being by this time quite discredited, the inflationists were 
next to try their hand on that hapless community. India, with closed 
mints, was now to coin more rupees in two yeara than in any four years 
of her history with open mints I Little wonder, then, that bar Gold 

Wagea in ih* We$t and th» Cf%$u in Exckangta with iht Etut 1 i 

Standard Rewrve Fund, representing the pinching and pBnimouy tif 
hnplets 8ir Janiei Weitland, hu flown away, and the end in not yut. 
For the inflation has apparently to inflated, the watcrtpout so Rpoutcit, 
that now the water stands in pools; the Indian currency has now bien 
fairly swamped by hundreds of milliors of new rupees. But do not be 
over-much troubled official India, for it will presently drain away 
as the rain on desert sandn. Meanwhile the hoarder, tlie man 
who had bangled his rupees for better safety, cannot, as of old, on 
presentation at the mint, get one 'apee for one tola of silver, but 
about one-half a rupee, and even when he has bought half a rupee at 
this famir > rate, what then ? Alas I its purchasing power is bo shorn 
that it buys him but "the little loaf." 

From all this and much more, which had better be passed lightly 
over, the fostering proposal of the two great Republics in 18D7 would 
have saved India. But to-day there presides at the India Office a 
statesman, not a gramaphone, and the writer of these pages ventured 
to inquire whether, in the event of issues of "Goschen notes" by 
America and other nations, such an advance in silver would be met 
by a deluge of melted rupees. In that case the Indian and Ch'nese 
eichange is tied down to forty-three pence for all time. If such is 
to be the policy of India the twilight deepens and the pofHion has 
become hopeless. The following short reply from Ijord Morley is very 
important : 

ladla OITce: Feb. 0th, 190r. 
Desr Mr. Mortton Fr«wcn. — There Is no intention ?r idM of maklnff any 
change In the currency iystein of India; and ai regards a rlM In the price of 
lUvci to 43ii. par ounce, we shall he quite ready Ui croai that bridge when we 
eome to it. Nothing would, «■ a matter of fact, buit India better than a rite 
in lilver. If it went to the intriniic value of the rupee {43d. or over) we 
■hould raiae the Issue price of the R. to one>am.Viix, and would, of courts, 
retain our R. currency. — Yours sincerely, Moblbt or B. 

There is enough, probably, in the above note to have contented 
France and the United States in 1897, and the negotiations might 
have succeeded. What they required was to be protected against the 
melting of rupees by India. If the Government of India, and that of 
Singapore, will "raise their issue price" and keep their exchange, as 
would not be difficult, just higher than the bullion point of their cur- 
rencies, that is a subscription hardly less valuable than open mints. No 
coins could go to the melting-pot, and never again after the terrible les- 
son of 1897 will the rupee currency be starved of the reasonable annual 
additions needed. It is, then, just possible that we arc at the dawn of a 
new day. Bimetallism, indeed, bus gone, but given a steady advance 
in silver, Mexico, Japan, and the Malay States, warned by the crisis 
of las' year, might probably revert to silver. China is pledged by the 
Peking Treaty of the 28th of July, 1903, to supersede her currency 
abominations, unsecured notes, copper cosh, debased silver issued by 
her provincial mints, by "an uniform national coinage, to be lojral 
tender in payment of all duties, taxes, and other obligations through- 
out the Empire by British as well as Chinese subjects.'* 

The Chinese envoy, Tong Shoa Yi, is now in Europe on this mis- 
sion. A truly remarkable personage, it would be well if our mandarins 

16 IJajM IK », H„< and Ikt CrUit in Ezckanfu wiik Iki Btil 

■pprotched lliia on« in knowledgt or currency conditiont. Hii Ei- 
oellmcy write to hip tlie l«tli of Fchruiiy; 

J".™!? *»'"•"<"■ '.» •••Ii«"f« iwh u IhoM of lut rasr ar«. of eourx. 

■trlM, w 

tho nehi 

- -■ -— — .. ..■ M<^Man||w i> *T«n ■■ ma iDcroaiiiw urlffi but. 

terlir, our nporti m not roduMil, but ort, » to iimIi; mboMlnS/ 

» Lt "«*••""""■ •" MBnanfo iiKn ft* tlKIM of loit yoAf 
iTlaJ^Z!^ '".i" '"ir!,'"« "»"t'»»l«l •till, » dovbl ..t « 

I~£ S,,,.?;?^.^, '^ ""P""!"" »' Imported foreiin ^. If tb. «rh.ii(i 
Tbui tbo fill In tiebonfo U mn •■ u iHruiriif tullfi bat, unllkt^ 

Fin«]ly, there remaiiu Africa. When on the Viit.iri* Sytatt 
three yearn ago I wai delighted to find that the Indian ruiwe ia mver- 
ing a vast region in acven-leaguwl Iwota, and i> already current from 
the Abysainian frontier neajly to Tanganvika. Between i81)(l and 
190r the Mombaaa branch ,.f the National Bank of India hail im- 
porteil almoat twenty million rupee«. Thin coin and ita iubdivinioni in 
annaa and pice iji not merely building railwaya, unlocking trade., and 
atimulating and rewarding induntry, but is teaching milliimn of the 
iona of Ham the clementa of mathematici. Every eHort aliould be 
made to irrigate the Dark Continent wi*;i the rjpcc. Importwl into 
Africa and nettling down in a myriad hiding-placca it ia gone forever; 
it will never return to India to aeek conversion at the hands of that 
Government. At the present time Lord Morley would lose nothing by 
selling to Lord Crewe, for external use in railway construction in Africa 
not fifteen rupees tor a -mereign, but twenty-seven. Never again may 
the British Government lave such an opimrtunity to build cheap rail- 
ways in Kast and Cientra! Africa. The profit per rupee will pav half the 
cost of the construction of the roadbed, while the constructed "road vill 
introduce for hoarding and absorption an immenae funhcr flow of 
rupees. Were the wages of native labor in the Tranavaal gold miuea 
pHid with rupees, even at fifteen to the sovereign, it would apper.r to 
that labour, already accustomed to receive florins at ten to the sov- 
ereign, even a. a rise of wages. The rupee in joint use with gold in 
the Transvaal might greatly reduce the cost of producing gold, and 
instead o.f i large proportion of the product of the gold mines being 
carried away by natives to Portuguese Africa and to the North, to be 
lost to commerce, their absorption of silver in place of gold might be- 
come of great economic importance. 

It has been possible in these few pages merely to survev, as through 
a glass darkly, the extreme outposts of a mighty domain' of economic 
research. Arc we of the West to continue to lay well and truly the 
foundation-stone of success for the competition of Chinese labor 
employed in China? 

Above all things, a new Commisjion is needed to report on the en- 
tire problem of exchange. Since the Commission of 1888 a whole 
Niagara of fact and experience has thundered down the canons of time 
Is all that vast volume to be lost in the arid sands of ignorance, or may 
we yet learn its lesson and profit by its warning, even though here, anil 
there, an ofhcial reputrition may perish in its rapids ?