172 MONEY AND CREDIT 



seriously rising, during all the years when the production of gold 

 has been so astonishingly large. The facts oblige us to question a 

 theory which presents such evident disparities as this; and one is 

 obliged, in all fair-mindedness, to accept the truth that many other 

 and potent influences, besides the quantity of the media of exchange, 

 have a powerful effect upon the price level. When this admission 

 is made, then the investigator is in a position to understand the 

 remarkable influences of the great industrial revolution of the last 

 thirty years upon the expenses of production of all articles, and 

 hence upon their market prices. Thus, the sweep of economic 

 forces, in the natural tide of events, is bringing us to a saner and 

 very different point of view from that of the scientific bimetallist 

 of past years. 



VII 



Stability of Exchange 



Consistency is a jewel; but it may be questioned whether it is 

 always worth the price. The escape from the pitfalls of bimetallism 

 and the quantity theory has led to some new and surprising formu- 

 lations. It had been the hope of the bimetallists to secure a parity 

 of exchange between countries now using gold and silver standards. 

 If gold could be maintained permanently at a given ratio with silver, 

 this happy result might have been brought about. It is needless 

 to say that bimetallism proved to be a political impossibility, even 

 in the countries of the Latin Union. By force of business require- 

 ments, such silver as has remained in general circulation was effect- 

 ively kept at a value in gold equal to its face value by varying devices 

 in different countries, all of which had a common principle, practi- 

 cally equivalent in a more or less evident form to redemption in gold. 

 In the case of India, it is frankly accepted that the value of the rupee 

 has been maintained at a fixed price in gold by a machinery which 

 amounts to the establishment of the gold standard, involving a 

 quasi-redemption of silver rupees in gold at IQd. 



If, however, there are some silver-loving sensibilities to placate, 

 such a process is not spoken of as the establishment of the gold 

 standard through the indirect redemption of inferior silver by gold, 

 but it has been discovered that a uniform ratio of exchange between 

 gold and silver-using countries can be established, not by the gold 

 standard, but by a " gold-exchange standard." In the recent pro- 

 posals laid before Mexico and China this new form of statement has 

 been employed. It is difficult to know what the new term means. 

 A bill of exchange in a silver country drawn on a gold country is 

 nothing but the amount of silver coins of the one nation which must 

 be given to buy a stated sum of gold coins of the other nation. The 



