[To THE EDITOR OF THE " SPECTATOR. "] SIR,—Allow me to
give some reasons for disagreeing with the letter of my old friend, Mr. T. Hanbury, in the Spectator of August 25th. He refers to the advantage accruing to the Indian producer of wheat in consequence of the fall in the gold price of silver, and he calls the result " Protection," in a " monstrous " and even " odious " form. I venture to think that this is a misuse, if not an abuse, of words. By Protection is meant legislation expressly made in order to discourage a given import and thus to add to the price, or to maintain the price received by the protected producer. Now, no English legislation has given to the Indian the advantage in question. By the course of events, aided, no doubt, by changes of law in other countries, the price of silver measured in gold has fallen, while, at the same time, the prices of most articles as measured in silver in India have changed little, if at all. The luck of the situation is with the Indian producer. So far from pro- tecting him, the Government of India has endeavoured, by closing the mints, to lessen the advantage which had accrued to him. To call our attitude " Protection " seems to be almost absurd. On another point I fail to follow Mr. Hanbury. He assumes that want of gold has caused a fall in " all com- modities." He says that this fall has come about" in conse- quence " of what he calls " the appreciation of gold," expressed by "the figures 1 of gold = 35 of silver."
Now in the first place the fall in prices is not universal, and in the next place it has never been proved that the fall which exists, however important, has been caused by any deficiency in the amount of gold available as money. The fall in silver has been caused by a lessened demand, coinciding with a great increase of supply. The fall in other articles is easily explained by increase of production coupled with so marked a reduction in the cost of distribution, that, as was said to me long since, " The planet has become a village."
I cannot go into details. I merely wish to express once more my protest against the assumption so often made, that we are suffering from " scarcity of gold." I do not believe it; and I think the error, if it be an error, is dangerous, because those who believe it advocate a remedy for low prices, which would, I believe, be no remedy, and would only disturb our currency without securing the higher prices which are desired by producers. Whatever be our definition of " money," we appear to be now suffering from plethora rather than from scarcity of money. By making silver money, as well as gold, we might add to the plethora; but it does not follow that we should cause a permanent advance in prices. If the plethora now existing coincides with low prices, how can we expect to secure higher prices by increasing the plethora P—I am, Sir, &c.,
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