30 



in Paris at 60||d. peroz. — that being the equivalent, as fixed by 

 the 15|- to 1 ratio. The consequence was that the Bi-metallic 

 law compelled France to part with the dearer metal silver, in ex- 

 change for the cheaper metal gold. But in a few years the tide 

 turned, and silver became the cheaper and gold the dearer metal. 

 What happened could have been predicted. The cheaper silver 

 was exchanged for the dearer gold, until the French people 

 opened their eyes, and in 1874 restricted and in 1876 totally 

 stopped the coinage of silver. I doubt whether there is any 

 lesson in the whole range of history more pregnant of warning 

 than the action of the Bi-metallic law in France from 1850 to 

 1876. The losses sustained by France during that period must 

 have been enormous, and the final collapse proves the im- 

 possibility of fixing an arbitrary value between two things of 

 which the production and demand are constantly changing and 

 varying. So long as the conditions of supply and demand kept 

 the real ratio between the two metals anywhere near to the fixed 

 ratio of 15^ to 1, France was able to bear the strain of main- 

 taining the equihbrium. But the system broke down. What 

 made it do so ? If you examine the question you will find there 

 were several causes which — tending in the same direction and 

 being in operation at the same time — by their combined forces 

 so threw down the price of silver as to make the maintenance of 

 the ratio of 15^ to 1 impossible. 



Why France ceased to coin silver. 



One of these causes was the large increase in the annual 

 production of the silver mines. Extraordinary discoveries of 

 deposits of silver were made in America and elsewhere, and the 

 annual production which from 1852 to 1862 had averaged about 

 £8 millions, had increased in 1875 to nearly £18 millions. 

 Another cause was the lessened demand for silver from India 

 and other eastern countries. In the ten years from 1857 India 

 absorbed over £110 millions of silver, and the production during 

 the same period was about £90 millions. But in the succeeding 

 ten years from 1867 to 1876 India absorbed only £45 millions, 

 while the production had increased to over £150 millions. 

 Another cause was the demonetisation of silver by Germany. 

 The coinage of the countries constituting the German Empire 

 was in a very barbarous state, both from the multiplicity of the 

 various kinds of coins and their debased condition. The German 

 Government determined on establishing a uniform coinage, and 

 also on changing the standard from silver to gold. 



What would be the Effects of Bi-metallism if adopted. 

 You will perceive that of the three causes I have mentioned 

 two are natural causes, and one is the result of legislation. 



