for coinage the mint is bound on principle to give 1,869 gold sovereigns weighing 40 lbs. ; thus returning in coin the same quantity of pure gold as received in bullion, and making no charge for the cost of coining it. I have constantly expressed my conviction to the effect that, as soon as the double standard becomes a subject of practical discussion in Parliament, it will be found requisite to abandon the present system of free coinage (that is to say, coinage free of charge) for the purpose of re-establishing the double standard by opening the mint for the unlimited coinage of silver as well as of gold. No one in so influential a position as that which you hold has hitherto expressed an opinion at variance with that of Lord Liverpool on this point. For the Governor of the Bank of England openly to oppose Lord Liverpool on the question of the gold standard constituted an important event in our financial history; and it would be a scarcely less important event for the Governor of the Bank to oppose Lord Liverpool on the question of free coinage-that is to say, as regards making a charge for coining, or coining free of charge. 1 To prevent the risk of misunderstanding, allow me to restate that my main contention is to the effect that justice to the labourer demands that the mint should be open for the coinage of both silver and gold for unlimited legal tender: technically at the ratio of 151 to 1, though equity would be satisfied by the more convenient ratio of 15 to 1. And I contend that Parliament ought not to hesitate for the purpose of considering whether the course of justice would or would not give us a silver instead of our gold circulation, nor as to whether a silver would or would not be more advantageous to the commercial community than a gold circulation. together with the question as to who is to pay the cost of coinage, are matters of minor importance from the above point of view. But, when considered as a question of commercial convenience, into the discussion of which I have been drawn 1 More exactly, 15.209 to 1. These, by your criticism, then the question of free coinage (as distinct from unlimited coinage) becomes of paramount importance. The whole question as to whether the double standard is or is not superior to the gold standard from a merely commercial point of view seems to me to depend upon it, for I cannot consider the superior steadiness of the double standard alone sufficient to compensate for the extravagance and inconvenience of throwing the mint open to the unlimited coinage of silver free of charge.' VIII. The Issue Department of the Bank of England has really formed the sheet-anchor of our financial system, and I suggest that the mint ought to be under its control; or that, at any rate, the Issue Department of the Bank should in all respects act as agent between the mint and the public; and that the existing arrangement between the Government and the Bank should be so modified as to allow the profit on the issue of notes to supply an income to cover the loss incurred by abrasion of the coinage. In this manner the currency would be completely selfsupporting, or might easily yield a considerable income to recompense the Banking Department of the Bank of England for the transaction of Government business. LONDON: April 16, 1883. 6 I Lord Liverpool states that what he means by the mint being 'free' is, where everyone has a right to bring gold or silver to the mint to be 'converted into coin; not at the charge of the person who so brings it, 'but of the public.' The term must not, however, now be understood to mean more than merely unlimited coinage, unless otherwise expressed; and not necessarily free coinage in the sense defined by Lord Liverpool. It is now used by Mr. Gibbs and Mr. Grenfell in this restricted sense. The Quarterly Review for April has declared against Lord Liverpool as regards coinage free of charge. PREFACE ΤΟ THE SECOND EDITION, 1882. IN commenting on the First Edition of the following Paper on 'Lord Liverpool's Oversight' a few days ago, a London reviewer alludes to it as a 'defunct controversy.' If, however, the reviewer will look a little more closely at the book, he will find that it not only is not the defunct controversy he supposes, but that it is the discussion of a question which was never dreamt of in the philosophy of William Cobbett, Sir Robert Peel, or John Stuart Mill; and that it is not only a 'living 1 1 Mill, after arguing that under the double standard 'the money of the 'community would never really consist of both metals, but of the one only which, at the particular time, best suited the interest of debtors,' says: 'The plan of a double standard is still occasionally brought forward by here and there a writer or orator as a great improvement in currency. 'It is probable that, with most of its adherents, its chief merit is its tendency to a sort of depreciation, there being at all times abundance of supporters for any mode, either open or covert, of lowering the standard. 'Some, however, are influenced by an exaggerated estimate of an advan6 tage which to a certain extent is real, that of being able to have recourse, for replenishing the circulation, to the united stock of gold and silver in the ' commercial world, instead of being confined to one of them, which, from 'accidental absorption, may not be obtainable with sufficient rapidity. 'The advantage, without the disadvantages, of a double standard seems 'to be best obtained by those nations with whom one only of the two ⚫ metals is a legal tender, but the other also is coined, and allowed to pass 6 'question,' but what the Lord Mayor of London has recently, at a public meeting at the Mansion House, declared to be 'a question which he thought there could be no denying was the 'most important of the present age.'1 ' for whatever value the market assigns to it. ' it is naturally the more costly metal which is When this plan is adopted left to be bought and sold " as an article of commerce. But nations which, like England, adopt the more costly of the two as their standard, resort to a different expedient ' for retaining them both in circulation—namely, to make silver a legal ' tender, but only for small payments.' * The above is enough to show that Mill had no conception of the fact of the Currency Act of 1816 having changed the standard of value in the manner I have explicitly pointed out in Chapter I. of this volume. The only gleam of an approach to understanding the question is his allusion to what he calls an exaggerated estimate of the advantage of being able to replenish the circulation from the united stock of gold and silver instead of being restricted to only one of those metals. I do not suppose, however, that any such estimate went so far as to suggest that within fifteen years of the closing of the European mints against silver the gold standard would be enhanced in value more than 40 per cent. ; and therefore, unless those estimates went beyond that, the event has proved that they were not exaggerated, but reasonable or moderate estimates. Mill taunts the adherents of the double standard with wanting a sort of depreciation, without appearing himself exactly to understand how; but the event has proved that if the advocates of the double standard had prevailed at that time, they not only would not have caused any depreciation of the standard in any manner whatever, but would have prevented the present mischievous appreciation.-Note to the Fifth Edition, 1888. The Times, March 11, 1882. See Index, Currency and Land Questions. *Principles of Political Economy, by John Stuart Mill, vol. ii. p. 34, 6th edit., 1865. DISCUSSION ON THE PAPER ON THE DOUBLE July 28, 1880. THE first speaker against the resolutions quoted the opinion of John Stuart Mill in favour of a single standard, considering the maintenance of a double standard impossible, because the cheaper must drive out the dearer metal :— If one country only had the double standard, and, of the other countries, some the gold and others the silver standard, and if silver were brought to the silver mints for coinage in so much greater amount as to make its excess beyond the value of the new supplies of gold greater than the value of the gold circulating in the bimetallic country, then the gold would be driven from the latter country. A smaller supply of silver than the value of the gold in circulation in the bimetallic country, or a smaller supply of gold than the value of the silver in that country, would simply change 1 See Chap. VI. |