8 MAY 1886, Page 8


TF we say that we have been greatly impressed by M. de

Laveleye's article, "The Economic Crisis and its Causes," in the current number of the Contemporary Review, it does not mean that we have become bimetallists. That, no doubt, is the effect which M. de Laveleye wishes to produce in the minds of his readers ; but the point to which we wish to call attention now is a long way short of that. Bimetallists and monometallists may agree so far as this,—that the facts stated in the article are striking, and even startling. Seventeen years ago, it was said in the Economist that the then annual gold supply of thirty millions sterling was no more than sufficient to prevent the constant tendency of prices and wages toward decline ; that the real danger was that the then supplies should fall off ; and that among the most salu- tary events that could occur would be the discovery of new and rich gold deposits. In 1877, the annual supply had fallen from thirty millions to about twenty-two millions ; and Mr. Bagehot ,pointed out that if the adoption of a gold standard became more general, the supply of the metal would scarcely suffice. Now, in 1886, the annual supply has dwindled to about eighteen millions,—little more than half what it was seventeen years ago ; and contemporaneously with this reduction, "sud- denly and universally, save in India, the free coining of silver is prohibited, and gold coin, heretofore a luxury, becomes all at once the sole means of international exchange." The two contingencies dreaded by Mr. Bagehot have come to pass. There is lees gold in the world, and there are more countries using it 39 a medium of exchange. So far, M. de Laveleye is dealing only with facts. In the latter part of his article he passes into the region of theory. The question he asks is whether a universal fall in prices is really an evil. One answer to this inquiry he gives in the words of Mr. Bonamy Price. "This lowering of prices," says the Oxford Professor, "if it be general, affects no one's position, and presents the advantage of rendering less coin necessary for the effecting of the same number of transactions." That is the way in which a serene and unshaken monometallist looks at the case. M. de Laveleye, who is an excited and terror-stricken bi- metallist, takes a very different view of the circumstances. To Mr. Bonamy Price's consoling words he replies by a distinguo. The Professor's proposition "would be exact at the outset of a nation's career, but it is completely erroneous in reference to a society where all the transactions and the debts have been regulated on a fixed scale of prices." We have to do with societies of the latter kind. Instead of a fall in prices which "affects no one's position," M. de Laveleye sees a fall of prices in consequence of which "coal-mines are being rained and abandoned, ironworks and factories are closed and deserted, buildings and machinery are left uncarell for, to perish little by little,"—except when they are burnt or sacked by workmen who cannot find em- ploynnent, or cannot live on their reduced wages. And then he quotes, with entire approval, a passage from the

Report of the American Monetary Commission of 1876 :— " The labourers must make their wants conform to their diminished earnings. Consumption is, therefore, constantly shrinking towards such limits as necessity requires. Produc- tion, which must be confined to the limits indicated by con- sumption, is constantly tending to a minimum, whereas its appliances, built up under more favourable conditions, are sufficient to supply the maximum of consumption. Thus idle money, idle capital, idle labour, idle machinery, stand facing

each other, and the stagnation spreads wider and wider. It is in the shadow of a shrinking volume of money that dis- orders, social and political, gender and fester ; that com- munism organises, that riots threaten and destroy, that labour starves, that capitalists conspire and workmen combine, and that the revenues of Government are dissipated in the employ- ment of labourers or in the maintenance of increased standing armies to overawe them." Some day or other, no doubt, things will mend. The fall of prices will be fully accomplished, and the balance will be re-established at a reduced rate. We shall have learned to cut our coat according to our cloth, and know how to make a little gold go a long way. But in that future, which, even on the most hopeful estimate, is still distant, M. de Laveleye foresees another "category of evils." The world owes five thousand millions sterling, and the interest on this vast sum has to be found by the taxpayer. Governments do not take payments in kind ; the producer has to stop on his way to the tax- gatherer, and turn his goods into gold. In proportion, there- fore, as gold has risen in value, he has to sell more goods in order to get gold enough to meet the taxgather's demand. When wheat is at 80s. a quarter, the farmer must raise twice as much to pay the same taxes as he would have had to raise if wheat were at 60s. The greatest sufferers from this cause will be the oldest nations, since they, for the most part, have the largest debts and the least reducible expenditure.

We are not, we must repeat, accepting these inferences as proved. All we say is that they are startling, and that if they can be established, they are of surpassing importance. At this moment there is nothing that all the statesmen of Europe put together could do which would so increase the sum of human happiness as to bring the industrial depression to an end. According to M. de Laveleye, the adoption of a double standard would at least start us on the high road to this result. Other eminent economists hold the opposite opinion ; but it is safe, we think, to say that they do not hold it quite so confidently as they did. They are not bimetallists, but they are not the assured monometallists they once were. The question has been brought back into the region of controversy ; from a craze, bimetallism has become a theory. We might expect, therefore, that, in all countries, Governments and politicians would be throwing themselves ardently into the question; that every where Royal Commissions and Parliamentary Committees would be collecting evidence and drafting reports ; that the public at large would be chafing at any delay interposed between the inquiry and the practical conclusion ; that the commercial crisis would be the sole and persistent occupation of all minds. Most of all, one might think, this would be the case in England,—England, the most sensitive of all countries to the variations of trade, and which has the special advan- tage of a great financier for its First Minister. Yet, as a matter of fact, what do we see in England? The great financier is absorbed in political vivisection. He is cutting the United Kingdom in two, in order to ascertain whether the vitality of the halves will be equal to that of the whole ; and his followers are too bent upon ensuring him a free field for his experimental knife, to have either time or thought to spare for anything else. How is this strange contradiction to be explained ? Is it that man has become conscious that he does not live by bread alone, that the inferiority of mere material comfort by the side of the realisation of ideals is at length felt and admitted ? Hardly. Is it that politicians are blinded to everything that cannot be expressed in terms of party warfare, and that, in comparison with a party victory, national advantage has lost its attraction ? We fear so. But however it is to be accounted for, the fact remains ; and the indifference with which the great trade depression has been regarded in England will hereafter be regarded as one of the strangest features of this strange epoch. It will be said that while the people of Europe were growing from misery into a Socialist temper, their statesmen were intent, especially in England, solely upon politics.