Financial Legislation and its Limitations. 49 



spreads the loss over his partners in social production — the 

 manufacturers; laborers, and other prior producers. The fall 

 of silver in the eighties was not entirely foreseen or discounted. 

 The miscalculation was as to the fall of silver rather than as to 

 the rise of gold, and afit'ected the English exporter more than 

 the world's agriculturist, who had repeated on a gigantic scale the 

 time-worn error of overproduction. The following citation indi- 

 cates the severity of the shock: 



Until lately the Indian banks were ready to buy the bills of their cus- 

 tomers in advance; but the fall in silver of late has been so rapid and so Bankers take 

 extreme that the banks are afraid to continue this kind of business, and the risk of the 

 consequently the whole risk of a further fall is thrown upon the exporters, their^own °" 

 The exporters are less able to calculate the chances of the market in this shoulders, 

 particular respect than the Indian banks, and therefore are bewildered 

 and paralyzed by the uncertainty in which they are placed." 



A quotation could not have been made intended to be more 

 adverse to the gold standard and more favorable to bimetallism 

 than the above. At the same time, the statement is plain that 

 ordinarily the banks dealing in Indian exchange were able to 

 diminish loss to Lancashire exportersi in cotton goods to India, 

 arising from the appreciation of gold. The case contemplated 

 in the citation is admittedly an extraordinary one. 



Treating the relations between France and Germany, on the 

 one hand, and Russia, Austria, and other countries with a more 

 fluctuating and uncertain standard, on the other, a similar potency 

 in the foreign bankers for steadying the exchanges is noted by 

 Rafifalovich: "We must not lose sight of the fact that, to a 

 certain degree, exchange operations for a time more or less 

 remote are a thing that is essentially legitimate and useful. They 

 allozv the business man to make himself sure of the rate of 

 exchange*^ at which he will pay or cash in the product of his 

 importations or of his exportations."** 



§ 14. On the other hand, while momentarily the exportation of 

 goods in the Indian trade will be encouraged from the country 



*^ Saturday Review, vol. LX, p. 449. 



**The italics are the writer's. 



" Raffalovich, Marche financier, 1892, p. 85. 



163 



