Financial Legislation and its Limitations. 



47 



exports, the best thing to do was to go over to that standard. 

 Since 1875 it c,an hardly be said that American exports have 

 needed stimukis. Such weakness as they may have shown at 

 that time has been tenfold repaired subsequently, without the 

 aid of bimetallism. The export argument for the silver standard 

 was made in the several countries of the western world. The 

 English silver party claimed that Englishmen were prevented 

 from exporting their cotton from Lancashire to Bombay by the 

 fall of the value of silver and by the consequent fall of silver in 

 ratio to gold. 



The people of the silver standard nation, said these reformers, 

 being accustomed to a certain range of prices in silver, satisfy 

 its wants for commodities at the usual level until some outer force 

 enters tending to alter it. In a country like India, the price of 

 commodities is fixed by immemorial usage : so much for a pair 

 of shoes since the time of Buddha. In the United States, also, 

 the farmer is possessed with the idea that wheat is " worth " a 

 dollar a bushel, and is not satisfied unless he receives for it some- 

 thing that is called a " dollar." In the outer market, somewhere 

 outside of the silver-using country of customary prices, as Pro- 

 fessor Nicholson, himself a bimeta'llist, has shown,*^ the ratio 

 of silver to gold may be assumed to be so disturbed that it takes 

 more silver than formerly to exchange for a given amount of 

 gold. This means that in the silver-using country, in order to 

 bring the ratio between silver and gold to the same proportion 

 as prevails in the outer market, the stock of silver must be in- 

 creased. And in a gold-using country, for the same reason, the 

 amount of gold must be decreased. Because gold has gone up in 

 value with respect to silver, there will be a tendency to export it 

 for purchase of silver until equilibrium is restored. Nicholson's 

 formula means simply that the ratio having been altered in favor 

 of gold in the outer market, in order to make the ratio in the 

 silver-using country the same, silver must be imported. It is 

 obtained in exchange for exported goods. A typical proprietor 

 of gold in the gold standard country exports it to buy silver in 



When two 

 nations have 

 different stand- 

 ards, the effect 

 on foreign 

 exchange of a 

 change in their 

 relative value 

 is soon ex- 

 hausted. 



How equilib- 

 rium is dis- 

 turbed and 

 restored. 



J. Shield Nicholson, Money and Monetary Problems, case II, p. 367. 



161 



