which the emperor might overlook. They are purchasing a temporary victory at a terrible price — that of destroying the independence and frankness of the German diplomatic service — but still their course becomes partially intelligible. What remains unexplained, and we suspect inexplicable, is the dread which a man so exceptional as the prince, so full of confidence in himself, and so popular with the people, evidently feels of a rival who, whatever his powers, has no hold on the country, and who palpably lacks the discretion which is the necessary armour for such a war.
THE LOW VALUE OF SILVER, AND ITS EFFECT ON INDIA.
When the great gold discoveries were made in Australia and California most people expected that there would be a more or less rapid fall in the value of gold as compared with silver. But, as a matter of fact, the effect has been the reverse. The value of silver as compared with gold was 59d. 3 far. per oz, or as 1 to 15.7 in 1849; it now is 54d. 3 far. or as 1 to 17.1. Not only what the best judges expected has not happened, but the very contrary of it has happened.
And this has not been the result of any collateral cause; it is the direct consequence of the gold discoveries themselves. The effect of these discoveries has been a great improvement in the currencies of the world, which, without them, would not have been possible. The countries of great commerce and large transactions require a more valuable medium of exchange, bulk for bulk, than countries of petty trade and minor transactions. The labour of paying 1,000,000l. in sovereigns is only a tenth of that of paying it in rupees, and therefore, where millions have to be paid sovereigns are a ten times better currency than rupees. Gold is much the best currency for rich nations of large trade, though silver does well enough, and is in some respects most suitable, for poor nations of little trade. But thirty years ago it would not have been possible for the nations of great commerce to have adopted this best currency. There would not have been gold enough obtainable. The supply from the mines was then barely sufficient to maintain the existing gold currencies; it would have been entirely insufficient for establishing new currencies on a large scale. No one then would ever have dreamed of proposing it. But, as we all know, Germany has just now tried the experiment on a great scale. She is buying gold, and selling off her silver. And in consequence silver is cheaper than it has ever been before.
Probably, if there were gold enough for all the world, it would be best that there should be only a single standard of value throughout the world, and that one — gold. But this is impossible. Some have doubted whether there is gold enough even for the nations which now intend to use it; and there certainly is not enough for all the world. Happily, the East has always been a country which had much silver, and for whose purposes silver was quite sufficient. The transactions of the East are small in comparison with those of the West, and therefore a bulky paying medium is not so inconvenient there as it would be here. Since economical history has been written silver has been always sent from Europe to China, India, and the richer parts of the East, and never more so than in our own time. The payments of England in silver to India during the cotton famine were probably the greatest cash payments ever made in so short a time by one country to another. There is, therefore, in the end a certain market for the silver displaced from Europe; it will ultimately go, as the rest has gone, to the East, where it is the ancient and the best-attainable paying medium.
But for the moment there is a difficulty in disposing of silver. There is no new sudden demand for it in the East. The case is not like that of the cotton famine. Then we had incurred a large debt to India, and we had to pay it in the only currency which she would take. We had to find an immense quantity of silver on a sudden, and France — owing to the peculiar operation of her double standard — found it for us. But now there is no such debt; the present problem is not to find the silver, but to find the use for the silver. And this is a slower process.
Sooner or later, however, the ordinary laws that govern foreign exchanges will do it for us. The consequence of the low value of silver is that the rate of exchange is now 1s. 9d. 1 far. per rupee (or less), the lowest or almost the lowest ever known. And this operates as a direct discouragement to ship goods to India. These goods are paid for in rupees, and when the merchant wants to bring home those rupees to England he finds that they do not go so far as they used to do. He has to pay much
