BIMETALLISM. 557 



9.— BIMETALLISM. 



By D. MURRAY. 



"Bimetallism" and " bimetallists " are terms of recent date. 

 Before tlie year 1873 the names as well as the signification were 

 almost unknown. Their introduction, however, did not denote a 

 new science. The theory and practice were for centuries in 

 existence. But in England gold monometallism, existing since 

 1816, operated in harmony with the joint standard on the Continent 

 and in America. This fostered the idea that, independent of silver, 

 gold suiRced for all purposes of the currency. People did not 

 believe that the demonetisation of silver would affect its price. 

 The ratio of 1 to 15^^ was expected to continue, though silver as 

 a legal tender v/as proscribed. The delusion that the gold standard 

 Avas in some way connected with the national prosperity kept fast 

 hold of the national mind. England looked on with a feeling of 

 selfsvifficient pride while other nations were satisfied with their 

 combined standards, as in the case of the Latin Union, and 

 Germany took advantage of her opportunity in the payment of a 

 large M'ar indemnity to follow British example in exchanging silver 

 for gold. The power of a ratio existing under legal enactment 

 and upheld by the free coinage of both metals was not appreciated ; 

 there was a general belief that the all-powerful economic influence 

 of supply and demand somehow maintained the equilibrium. It 

 was either forgotten or ignored that being constituted legal tender 

 the demand for the precious metals for currency rendered their 

 exchange value much higher than it otherwise would have been if 

 used for merely economic purposes. It was said that if one metal 

 got too plentiful a demand sprung up for it in those countries 

 which principally used it, so that the balance was maintained. 

 That a fall in the value of silver unprecedented in history should 

 take place was thought impossible. In former times had not silver 

 been produced in quantities three times greater in proportion to 

 gold than at that period ? And in the twenty years immediately 

 preceding 1873 had not the production of gold doubled that of 

 silver ? So great indeed was the increase that fears were entertained 

 of its stability, and under the influence of these fears Holland 

 actually adopted a silver standard. Yet the ratio never varied to 

 an appreciable extent. The agio was limited to the mere cost of 

 transfer and insurance. If silver was cheaper in England the 

 gold of France was at hand to buy it, and vice versa., for England 

 was still the principal market for silver. Thus, by a simple law, 

 restated in the French enactment of the year 1803, the par of 

 exchange between silver and gold remained unbroken for two 

 centuries, though enormous variations in the yield of the two 

 metals frequently occurred. The law is embodied in the three 

 following clauses : — 



1. The mints to be open to the coinage of all gold and silver 

 brought to them. 



