CHAPTER XVII.

MORETON FREWEN ON THE ISSUE.

(From the London Financial News of May 29, 1896.)

"It may be well to notice an error into which many persons ignorant of the currency question have fallen. They accuse the committee of desiring to rob the present public creditors in order to make up for the injury done to the public debtors in 1819. To such parties the committee recommends an inquiry as to how far the present relations and obligations of society are in accordance with the present gold coinage; and they will find that what the committee desires is to prevent further appreciation, or further robbery of the debtors, and not to rob the public creditor. The average of prices and wages is still about 25 per cent. above the present gold standard. It is the attempt at a further reduction which causes the present universal embarrassment. * *

Will or can the agricultural and commercial classes submit to this reduction? And, if so, would it be possible to collect the amount of revenue required by the government?"-From the memorial of the Birmingham Chamber of Com

merce, addressed to Sir Robert Peel, December 2, 1842.

To the Editor of the News-Sir: Your interesting leader of the 21st, upon the currency situation in the United States, may be shortly summed up in the following theses: (1) That no legislation by the United States, single-handed, can establish a parity between gold and silver; (2) That the free coinage of silver in the United States involves silver monometallism; (3) That gold monometallism is to be preferred to silver monometallism. Now, in the opinion of the silver party in the United States, if (1) is sound, (2) an honest silver currency such as Germany had until 1873, and India until 1893, is infinitely preferable to (3) an appreciating gold currency, even if which is more than doubtful-that gold currency can be maintained at all. As a general statement of the financial position of the United States it may be said that she owes annually these interest payments: $150,000,000 on loans, $75,000,000 remittances to travelers and absentees, $75,000,000 to foreign ship-owners: so that either her exports have to exceed her imports by £60,000,000 sterling or she loses gold, or, failing this, she has to borrow to pay the interest, thus piling higher the permanent interest charges.

"I venture to think that the debts of this nation of 70,000,000 people are even larger than I have stated them. The general condition of financial

strain, and consequent political unrest in the United States seems to be not less than is now the case in Australia, where the annual interest paid abroad by 4,000,000 people is known to be some £15,000,000 sterling. If we take, for example, the state of California; this state is in population, in resources and climate about the peer of New South Wales. The annual indebtedness of New South Wales is officially stated at £5,000,000 sterling. May not the debt of California to New York and to Europe be about the same? and, if so, how can California any more. than New South Wales permanently sustain the burden of a 50 per cent. fall of prices, which fall must have exactly doubled the burden of her external debt? Thus the one issue in the United States-which includes the other issues, such as the mere color of her money and the fiscal methods by which her revenue shall be collected -the one paramount issue is this: How can the United States secure a sufficient balance of exports to continue solvent? Now, I contend that if, as you admit to be the case the world over, a depreciating currency stimulates exports and contracts imports, then that portion of public opinion in America which favors silver rather than gold is intelligent. For scheme, and re-adjust, and tinker with the tariffs as you will, you cannot make a silk purse out of a sow's ear; you cannot restore the balance of trade to the United

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States unless her currency legislation is such that it drags up the exchanges between Europe and Asia; whereas every further movement, in America or elsewhere, toward gold monometallism drags those exchanges down. In short,

gold monometallism in the United States involves an increased competition for the industries of white men everywhere, at the hands of the yellow races of the orient; and there is not a consular report which comes to us from the far east but emphasizes this statement. What, then, is the argument for single-handed free coinage in the United States? It is this. Either free coinage will establish bimetallism for the whole world, or, failing this, there will be such a gold premium in New York as to-day assists exporters in Russia, in all Asia, and in nine-tenths of South America.

"This gold premium, unlike a protective tariff, will stimulate the exports of the United States, while acting, just as a protective tariff does, to reduce imports; therefore, either free coinage will give bimetallism to the whole world, or, failing this, it will tend to secure that excess of American exports over imports, which is the only possible alternative to further gold loans, leading to ultimate insolvency. These, then, are the arguments which favor a non-appreciating, or even a depreciating, currency in the United States. On the other hand, I do not see, qua its economic

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aspects, what possible advantage can accrue from a gold standard and a gold currency. A gold currency in America cannot raise-it cannot, indeed, fail to further depress-the European exchanges with 800,000,000 of Asiatic exporters. It cannot, therefore, fail to still further throw the balance of trade against the United States, unless, indeed, by further contracting the American currency, it forces down prices there to such a point as to contract violently America's import trades. And a pretty look-out for England that! In short, the clamor of our press that America shall become gold monometallic, seems to involve either the insolvency of our greatest debtor or the decline of our export trades to America, or both.

"There is this further point which you emphasize that if America copies our gold standard 'confidence will be restored,' and we will lend her more money; thus aggravating in the future the very disease from which she suffers. On the other hand, if she goes to free coinage we shall, in a panic, return her securities, and thus sell her back her railways and industrials at half price, just at that very moment when, her legislation having sent the rupee, the tael, and the yen to nearly, or quite, par, the export trades of the orient will be cut into, and the exports of the American farm, mine and factory will take their place. In other words, because of the inane