29 



ratio more nearly approaching the present relative values of the 

 two metals, which is about 1 to 20, while others express great 

 indifference as to the precise ratio, if only a uniform one be 

 agreed upon. 



Theory of Bi-metallism Examined. 



The theory of Bi-metallism is based on the idea that it is 

 possible for Governments by legislation and agreement to fix the 

 ratio at which gold and silver will exchange with each other. 

 In support of this theory the example of France is cited. As I 

 have already explained, France was Bi-metallic from 1803 until 

 1876. But although in theory this was the case, a careful 

 examination of the movements of the precious metals will show 

 that the double standard was not really in operation. Instead of 

 a double standard, France had really an alternative standard, that 

 is — whenever the market price of gold and silver varied from 

 the established ratio of 15^ to 1, the cheaper metal became the 

 standard, and the dearer one could only be obtained at a premium. 

 The same thing took place in the United States. Down to 1834 

 the established ratio was 15 to 1, and the consequence was that 

 America was practically a silver-using country. But in 1834 the 

 standard was changed to 16 to 1, and silver in France being dearer 

 as compared with gold, silver flowed from America to Europe, 

 and the United States became a gold-using country. 



EeSULTS of Bl-METALIiISM IN FsANCE. 



The Bi-metaUists contend that it was the action of the Bi- 

 metallic law in France and the other countries forming the Latin 

 Monetary Union that maintained the ratio between the two metals 

 for over 70 years. It cannot be denied that it must have had a 

 large influence in doing so. The Bi-metallic law fixed the price 

 of 15i to 1 at which the two metals should exchange with each 

 other. I have already shown that in this sense gold in England 

 has no fixed price. The effect of this law was that when silver 

 was dearer than gold it was withdrawn from France, and gold 

 sent in for it. When the reverse conditions obtained, gold was 

 withdrawn and silver substituted for it. This see-saw operation 

 has taken place more than once. When the gold discovered in 

 California and AustraUa came on the market it was sent into France 

 in exchange for silver to so large an extent that M. Chevalier 

 proposed to discard it as money and make France mono-metalHc 

 on the basis of silver. Mr. Cobden was so profoundly impressed 

 with the views of M. Chevalier that he translated his work into 

 Enghsh. But perhaps the most notable instance of it was during 

 the American civil war. At that time the exports of Cotton from 

 India were greatly increased, and as it rose to a high price there 

 was a great demand for means of remittance to India. Silver rose 

 to 62^d. per oz. measured in gold. It could always be obtained 



