silver-using nations may export to gold countries
without any loss, while sold countries find prices
falling. Thus, if wheat falls in price in England,
exporters in India sutler nothing, while export-
ers in the United States nuist he content with
lower prices. A fall in the gold price of silver
accompanies a fall in the prices of other com-
modities in gold countries, hut the relation of
silver to commodities remains the same, and no
enhancement of general prices ensues in silver-
using countries.
A more important tenet of the bimetallic creed is that such a system produces a more stable standard of value. The evils of instability in the monetary standard are thoroughlv conceded by all parties. As illustrated in the t'luctuating for- tunes of paper money, they are patent to all. Vnder a metallic system, changes in the value of the standard are more gradual and less revolu- tionary in their effects. Yet they exist, none the less, and reveal themselves in the ups and downs of general juice movements. It is only after some study that persons understand that prices and the value of the standard are reciprocals; that low prices mean a high value of money and high prices a low value of money. The economic effects of changes in the value o'f monev must be studied in the effects of price-changes. r)o™ward movements representing an enhanced purchasing power of money redound to the benefit of credi- tors and bear heavily uj)on debtors, who require a larger produce to fulfill their obligations. Up- ward movements lighten the burden of the debt- or, while they shrink the purchasing ]jower of what the creditor receives, and thus work to his injury. Such changes are not without ju-ofound effects upon the general conditions of trade and industry. Bimetallism proposes to eliminate in a large measure these evils, furnishing a more stable standard. Instability of the standard rests upon the fluctuations in the production of the metals. It is argued that by uniting in the monetary standard two metals 'instead of one, the fluctuation in the production will be dimin- ished. The aggregate i)roduct is less likely to vary than is the product of each, the changes in the production of the one being offset bv changes in the production of the other.
In reply to these claims and assertions, the gold monometallists have taken several positions. In the first place, some have contended that the evils which blmetallists seek to redress are of no great consequence. In the second place, others have contended that as a plan of relief bimetallism is out of the question because it will not work in practice. And finally, granting the possibility of bimetallism, it is elaimed that we have no gmirantee that it would actually relieve the situation.
It is an extreme view that the changes in prices, which constitute the chief .stay of the bi- metallic argument, have no relation to the money supply. If this, however, be true, a .system which, like bimetallism, aims at working" upon prices through the money supply is useless. If this extreme view has not been adopted by all monometallists, it is yet represented. Another and somewhat more moderate view of the same proposition is the claim that such changes in prices have worked far less disturbance than the bimetallists have claimed, and that if they in- »'olve some disadvantages, they have some com- pensations which the binietallist in his ardor has overlooked.
More important, and occupying a larger place in the bimetallic controversy, is the standpoint that bimetallism will not work; that no legal enactment can so fix the relative values of silver and gold as to insure tlicir concurrent circula- tion. In this view bimetallism is not a double standard, but an alternating standard. Diver- gencies between the legal ratio and the market ratio being bound to occur, Gresham's Law imme- diately enters into operation. The more valuable metal is no longer brought to the mint, and the existing stock in the circulation is exported. Monometallists claim this to be inevitable. They tell us that law cannot fix values: that the rela- tive value of gold and silver in the market will be fixed by commercial considerations, esi)eoially by the cost of production. Any attempt on the part of governments to interfere with the oj)era- tion of these laws must be fruitless. To these considerations the binietallist replies by calling attention to the predominating influence of de- mand as a factor afl'ecting the value of the pre- cious metals. He points out that as the existing stock is much gieater than the annual accre- tions, the cost of producing these cannot be the sole criterion of the value of the mass. He points out further that the denumd for the use of the metals as money far outstrips any other demand. He therefore concludes that law can and does affect the value of the metals and is com[)etent to fix the rates between them: that if the monetary demand thus created he strong enough, the commercial ratio must adjust itself to the legal ratio. Both sides of the contro- versy appeal to the facts of history as bearing out their contentions. On the one hand, the monometallist points to the fact that the French law of ISOl which established the legal ratio of 15^,^ to 1 between gold and silver did not control the market ratio, but there was always a diver- gence between them, leading now to a preference for gold and now to a preference for silver in the French coinage. The l)inietallists coni-ede that such divergence might have prevented both silver and gold being carried to the mint at the same time; that they might have determined which of the metals would be preferred for export ; but they strenuously deny that they caused the ex- port of one metal or the other. If the French law gave but an imperfect picture of the work- ings of the bimetallic system, it is only a proof to the advocates of the latter that the area within which it worked was too restricted. En- large the .scope of the law by :in international agreement embracing the leading commercial na- tions, and it would, they claim, be proof against fluctuations of ratio. Hence the agitation for a bimetallic standard has been for an international bimetallic system.
Finally, the monometallists are frequently willing, for argument's sake, to concede the practicability of bimetallism, that they nuiy put the further question. What would be gained? The evil to he remedied is an unstable standard. What guarantee have we that two metals would be better than one? The bimetallists claim a compensatory action ; that irregularities in the supply of one metal will outbalance tho.se of the other. They assert that a greater stability would follow the introduction of their system from the fact that by distributing the variation over a
