has vibrated somewhat during the whole historic period, but never before has the divergence been so wide as at the present time. As in every other department, the relations are entirely governed by supply and demand. Herodotus estimates the ratio of gold to silver as 1 to 13, Plato as 1 to 12, Menander as 1 to 10, and in Cæsar's time it was 1 to 9. For some time previous to the discovery of the rich silver mines of Potosi, in the sixteenth century, the ratio was about 1 to 111, and in the early part of the seventeenth century, 1 to 124. In the present century, previous to the great gold discoveries of California, it was between 15 and 16; and afterwards, in spite of the enormous increase in gold, it only fell back to 15.41. The following table, estimated from reports of the Mint Bureau, will show the remarkable change in the ratio of gold and silver that has taken place since 1873: The remarkable change as shown above is due, not only to the recent discoveries of enormous deposits of silver, but also to the discontinuance of silver coinage by the leading nations of Europe, and recently by the United States. Germany discontinued silver coinage in 1870, at the close of her war with France, and gradually put her enormous stock of that metal upon the markets of the This was like taking a heavy weight from one world. scale of a balance and placing it in the other, thereby doubly changing the relation. The Latin Union also joined in the same movement, and the departure of silver from its nominal and legislative ratio became more and more pronounced. For some time prior to the action of the United States in 1893, Europe was virtually out of the market for silver bullion for coinage purposes. The currency panic of 1893 was caused by the apprehension of the inability of the United States to maintain a parity even under limited coinage provided for under the "Sherman law." The Old World for three years had been returning our securities, fearing that a drop to a silver basis might be imminent. Thus the crisis came, not because of too little money, but from the fear that an increasing redundancy might at any time result in depreciation. Every one wished to stand from under what was impending. The world-wide trend was yet further indicated by the fact that India, which had always furnished a very extensive market for silver, joined in the general movement for a gold basis in the autumn of 1893. It has for some time been evident that nothing less than a general international agreement would so increase the demand for silver as to gradually close the great chasm which now exists between its actual and nominal value. But it is even doubtful whether or not a great international combination would be able to permanently restore the former ratio. Should it at once make the effort to artifi cially raise silver so much above its natural level, the production of that metal would be immensely stimulated. It is quite probable that in a few years the artificial would again have to yield to the natural. Even nations cannot prevent this. Furthermore, as has already been intimated, such a step would seem to be backward from an evolutionary standpoint. It is doubtless possible to maintain a parity of gold and silver coin in the United States, so long as no further additions of the latter are made, and thus practical bimetallism can be continued. But with any impairment of the public confidence, either as to the ability or intention of the Government to do this, a process of gold-hoarding could not be prevented. A minority in Congress, who with great persistence advocated the "free and unlimited coinage of silver," upon the former, or a slightly increased ratio, call themselves bimetallists, but it is difficult to see the propriety of such a designation. Such a measure would inevitably bring about silver monometallism. This was so clearly apparent, even under the restricted coinage of the "Sherman law," that the panic of 1893 was the result. It is hardly necessary to suggest that the moment that gold commands any premium, either through apprehension or real scarcity, it will cease to be currency and disappear. This would amount to a sudden contraction of the available circulating medium, but that would be but one of the many disasters which would result from a drop to a silver standard. No metal can really become a standard unless it possesses international acceptability. There are no walls between nations, and the commercial world is virtually a greater unit. Under modern conditions different countries are neighbors, and no one can disregard the action of the others. The "silver question" has no class, partisan, or sectional significance. Aside from the few owners of silver mines, Suppose for the sake of argument that it would be a temporary advantage for a "debtor section"—if such can be truly said to exist-to pay its obligations in a cheapened currency, it would finally prove a very mistaken policy. A high credit is vastly more valuable than temporary profit if such were possible. This is particularly true of the newer States where capital is needed for development. The temper of public opinion as represented in the legislation of each State determines its credit and standing in the financial world. It is for the interest of States to keep their credit so high that both they and their inhabitants can make loans at low rates of interest. Capital is attracted to such localities and becomes cheap and plentiful. Every degree of the element of doubt adds directly to the rate of interest in an increasing ratio. Nothing could be more permanently harmful to the debtors of a State than special legislation which is theoreti cally in their favor. It is often claimed, and with some plausibility, that within the last twenty years gold has grown abnormally dear at the same time that silver has been cheapening. But even if this were abstractly true, the practical fact remains that the general currency its basis which has gold for has cheapened. This was noted in the early part of this chapter as proved by the average advancement in products and wages, and also by the decline in rates of interest. With the great modern utilization of the various representatives of money, a vastly greater business can be transacted upon any given amount of the ultimate standard than in the past. In domestic commerce, coin cuts but a small figure, and in international transactions it is only used for balances. But the confidence in coin representatives, as to their ability for redemption, must be unlimited. Confidence is the great "power house" of the business world. If all distrust of the currency and of labor friction could at once be eliminated, an era of prosperity, natural and solid, would come to remain. If the present supply of gold is in any degree inadequate for the basal monetary standard, that fact will stimulate its production the world over. The available supply of the native metal is inexhaustible, and demand always brings supply. With scientific mining methods generally adopted, experts assert that the annual product can be speedily doubled. At the same time the cheapening of silver will greatly lessen its production, and this will prevent an indefinite continuance of the very rapid decline of the past decade. While but one monetary standard is possible, so long as the divergence between gold and silver did not amount to more than one or two per cent, a practical, though not a mathematical double standard apparently continued. But that time has past with no prospect of return. - With gold as the basal standard · even with silver so greatly depreciated a large volume of the latter can be floated and utilized at a parity. But the amount of silver must never become so excessive as to cause any doubt regarding their free interchangeability. The volume of inferior coined metal that can be utilized in any country |