93 



both silver and gold were in the habit of fixing a ratio — each 

 for itself — at which the two kinds of coin were legal tender. In 

 England this was accomphshed by declaring from time to time 

 the equivalent in shUhngs at which the gold guinea would be 

 received in discharge of debts due to the Government. 



The effect of the rupture of the Joint Standard system in 

 France in 1873 was to cause a great decline of prices in the 

 gold standard countries whilst prices were kept approximately 

 steady in the silver standard countries. This decline of prices 

 was brought about partly by the insufficiency in the supply of 

 gold relatively to the demand for it, and partly by the influence 

 of the fall in the rates of exchange between the gold standard 

 and the silver standard countries consequent upon the breach of 

 the fixed ratio. It was obvious that when the value of silver, as 

 measured in gold, declined, or (to put it the other way,) wlaen 

 gold rose in relation to silver an adjustment of the prices of 

 commodities as between the gold and silver countries became 

 inevitable, and since no rise took place in the silver countries 

 the adjustment was effected by a decline in the gold standard 

 countries. This decline had been attributed by many persons 

 to other than currency causes, and it could not be denied that 

 some other infliaences which, however, had been long in operation, 

 had tended to depress prices in these countries. It was impos- 

 sible, however, after once grasping the principle underlying the 

 great monetary change which took place in 1873, to ignore the 

 tremendous results of the divergence between the relative values 

 of sUver and gold just alluded to. But the most important con- 

 sideration was the momentous consequences which had resulted 

 in this country, from the general decline of prices, in the shape 

 of the greatly enhanced burdens which it had cast upon British 

 industry. It had practically increased the fixed charges upon 

 production. These charges were mainly comprised under the 

 following heads : — 



1. Taxation. 



2. Fixed rents and mortgages. 

 8. Royalties. 



4. Tithes. 



5- EaUway rates and fares. 



6, Customary prices. 



7. EetaU prices not adjusted. 



These had all been practically augmented, though remaining 

 nominally the same as before because of the greater purchasing 

 power of gold. The result of this practical increase of fixed 

 charges was diminished profits, and the consequent discourage- 

 ment of industry and commerce ; and, flowing from this, a want 

 of enterprise. These evils had notoriously characterised the 

 course of business through the past twelve or fifteen years. 



