By Hon. DAVID A. WELLS, LL.D., D.C.L.
ECONOMIC DISTURBANCE SERIES, No. VI.
THE Economic Disturbances Resulting from Recent Changes in the Relative Values of the Precious Metals. — Not-withstanding the great attention that has been given to this subject in recent years — with its almost interminable resulting publications and public and private discussions — there is probably no other one economic or fiscal problem concerning which there is so little comprehension on the part of the general public, or so little agreement as to causes and results among those who have made it a matter of special investigation. It is of the first importance, therefore, for the understanding of the past involved economic disturbances, that a clear and succinct statement of what has happened should be presented, and such a statement it is now proposed to attempt.
For many years prior to 1873 the bullion price of silver remained very nearly constant at from 60 to 61 pence per ounce on the London market, while the market ratio of gold to silver, or the ratio according to which gold and silver could be interchanged, was limited in London, from 1851 to 1872 inclusive, to a range of variation of from 1 to 15·19 (the minimum) in 1859 to 1 to 15·65 (the maximum) in 1872.
In 1873 the new German Empire — recognizing the importance of having a monetary system better suited to her advanced industrial and commercial situation than that which she then possessed, and also the desirability of having a uniform coinage throughout the numerous small states that had come to be included under an Imperial Government — took advantage of the command of a large stock of gold, that had accrued through the payment by France of an enormous war indemnity, to effect reform. An exceedingly miscellaneous system of coinage and currency — consisting of seventeen varieties of gold money; sixty-six different coins of silver, possessing full legal-tender powers and constituting (in 1870) 65·7 per cent of the entire circulation; forty-six kinds of notes issued by thirty-five different banks, besides state paper money of various kinds to the extent of 7·5 per cent of the cir-
- "It has been my experience, that about nine men out of ten, even of those who might be expected to have some definite views upon the subject, when asked their opinion upon the expediency or necessity of adopting a bimetallic monetary system, will reply. Oh, that is a very important question, but I do not pretend to understand it." — Edward Atkinson, British Association Proceedings, 1887.
- Pixley and Abell's "Tables," London.
- The amount in gold which France paid to Germany directly was $54,000,000; but in addition there were French bills of exchange which gave Germany a title to gold in places like London, on which such bills were negotiated.