CHAPTER III.

RIGHTS OF PROPERTY.'

FEW, even now, in discussing the relative merits of gold or silver or double standards of value, fully realise the fact that the pound sterling is what it is because the National Debt has made it what it is, and that every penny of the interest paid on that debt reduces directly or indirectly the wages of the labouring classes.2

Extract from a letter to the Herald, published October 23, 1881.

2. A huge debt was created in a short time. This debt was so much wealth created in two or three years, because it was interchangeable for commodities. It discounted the labour of the people of the United States for years to come. . . In two or three years this 600,000,000l. debt was created, which would not have existed, but for the war.

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'Lord Herschell.—But do you mean that every additional loan by a foreign state adds so much to the wealth of the world?--I mean to say that it is mortgaging the labour of future years. It is wealth so long as future generations work to pay the interest and the capital.'—Mr. H. L. Raphael, Royal Commission on Gold and Silver, 1888, questions 6951, 6954, 6956.

I give the above extract in corroboration of my statement to the effect that National Debts are a burden on the wealth-producing classes of the nation. There is, however, an inadvertency on the part of Mr. Henry Raphael in treating a creation of debt as a creation of wealth. It is more correctly a transfer of wealth. For the transaction is between individuals in possession of wealth already created by wealth-producing action of the past, and the representatives of a nation who engage that, if transferred to them for expenditure or investment, such wealth will be acknowledged as a debt repayable from the future wealth-producing action of the country. Note to Fifth Edition, 1888.

In the short time which has elapsed since I read the paper (July 28, 1880), in which I endeavoured to show that the repudiation of the National Debt by Act of Parliament would be a natural sequel to the repudiation of silver, unless the law by which silver was demonetised in England were repealed, we have witnessed a great confiscation of property, or repudiation of the rights of holders of property in Ireland, effected by Act of Parliament on the plea of necessity. The fact (to which I have elsewhere alluded) that since the year 1873, the law by which the double standard was repudiated in England has arbitrarily confiscated at least 20,000,000l. sterling from the pockets of the labouring classes in England and paid it to the bondholders as a bonus beyond the value of the interest due to them, is a comparatively trivial part of the mischief done by the attempted repudiation of silver. great evil has been the stoppage of trade, and the check to the production of wealth caused by the disorganisation of the currency. The English law of 1816 did not

The

1 'Taking the National Debt at 740,000,000l., it represents to-day an amount of average commodities that would have taken 1,057,143,000l. to purchase before the contraction of the currency began. A careful investigation of this question would probably show that the mediatisation of wealth from the producing classes and those allied with them to the holders of securities and the possessors of mortgages, annuities, fixed incomes &c. has taken place in the United Kingdom in the last twelve years to at least 2,000,000,000/.—Mr. J. Barr Robertson, Royal Commission on Gold and Silver, 1888, question 6269.

In their Final Report, under date of December 21, 1886, the majority of the Royal Commission appointed to inquire into the Depression of Trade and Industry state, par. 31: Those who may be said to represent the producer have mainly dwelt upon the restriction, and even the absence, of profit in their respective businesses. It is from this class, and more especially from the employers of labour, that the complaints chiefly proceed.

begin to have the practical effect of enhancing the value of gold until 1873, and then it not only steadily

On the other hand, those classes of the population who derive their incomes from foreign investments, or from property not directly connected with productive industries, appear to have little ground of complaint; on the contrary, they have profited by the remarkably low prices of many commodities.'

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In par. 27 they state that the depression dates from about the year 1875, and that, with the exception of a short period of prosperity enjoyed by certain branches of trade in the years 1880 to 1883, it has proceeded with tolerable uniformity, and has affected the trade and industry of the country generally, but more especially those branches which are connected with agriculture.'

In par. 36: The statistics of our foreign trade show an apparent falling off in some respects, but this is almost entirely due to the continuous fall n prices which has been in progress since 1873, and more particularly to the fall in the prices of raw materials.

The views, as above expressed by the majority of the Commission, are still more strongly expressed by the separate report of the minority, who, after stating that they concur in the general description of the nature of the evidence received, add: But the extent and severity of the depression of trade and industry, and the consequent insufficiency of employment, are not in our opinion adequately recognised and set forth in the report. Nor do we think it contains a sufficient exposition of the gravity and permanent character of the causes which are now operating to prevent the growth of our chief industries keeping pace with that of the population..'

And in par. 73: 'We expressed in our third report the opinion that this fall in prices, so far as it has been caused by an appreciation of the standard of value, was a matter deserving of the most serious independent inquiry; and we do not therefore think it necessary to investigate at length the causes which have brought it about. But we desire to give it a leading place in the enumeration of the influences which have tended to produce the present depression.'

Mr. William Fowler argues very elaborately in the evidence before the Royal Commission on Gold and Silver that the recent average fall in prices is not due to an appreciation of gold, but to special causes, which he mentions in detail, as acting at different times on important commodities, and the point of his argument and demonstrations does not appear to have been directly met. What seems to have been completely overlooked on both sides is the fact that commodities in general on the one hand, and the standard of value on the other hand, reciprocally measure each other.

swept away the margin for profit on each commercial transaction, but, by breaking down prices,' checked manufactures and industries of all descriptions. Wherever the natural difficulties for the creation of wealth may be greatest, or the population may be most thriftless or indolent, that strain on the currency must soonest become unbearable, and none, who appreciate the importance of the enhancement of the value of gold caused by the demonetisation of silver, can think it unreasonable to assume that if the prosperity of the world had not been artificially checked in 1873, Parliament would not have been called on to repudiate rights acquired by purchase in Ireland. Newton in England, and Bonaparte in France, gave practical evidence of having realised the fact that the law must acknowledge or adapt itself to rights which become rights by the slow process of natural selection. Gold and silver have grown into the position they hold as circulating mediums by that process, and if the law by which Parliament in 1816 repudiated the rights of the holders of silver con

Therefore, if at any moment the aggregate of prices represent a value of 100, it is quite beside the question to show that some special cause has made some commodity represent 20 which would otherwise have represented only 10, making the aggregate only 90; for the fact is that but for that special cause acting on that one commodity all other commodities would have been about 10 per cent. higher, giving, therefore, the same aggregate of 100 which, as long as the standard remains steady, is the figure which commodities divide between them according to their relative supply and demand. That figure changes only as the value of the standard itself changes in relation to the aggregate of all other commodities. —Note to Fifth Edition, 1888.

The fact is, you, as acquainted with mercantile affairs, know perfectly well that the depression of prices since 1873 has been something without a parallel.'—Mr. H. D、 Macleod, Royal Commission on Gold and Silver, 1888, question 7214.

tinues to be sustained and be not counteracted by the legislation of other countries, then Parliament will find itself gradually hurried from one act of repudiation to another until all rights of property are swept away. The attempted demonetisation of silver is a blow at the acquired rights of property which is felt all over the world,' and seems to me to be the most dangerous disaster that civilisation has encountered in its growth since, with the gradual strengthening of those rights, mankind slowly emerged from barbarism.

1 'The unprecedented continuance of low prices for several years past has not been confined to this country, but has been more or less general throughout Europe, where it has not been counteracted, as was the case in France in 1880, by more notes being issued. Simultaneously with the spreading of the existing stock of gold over a larger area, the supply from the mines has undoubtedly been smaller of late years, and the consequence has been an appreciation of the metal.'-A Review of the Position and Prophecies of the Bimetallists, by Arthur Crump (London: Effingham Wilson, 1882), p. 22.