CONTENTS

CHAPTER

I. LORD LIVERPOOL'S OVERSIGHT AS REGARDS THE
STANDARD OF VALUE, AND ITS CONSEQUENCES.

II. THE POUND STERLING: ITS HISTORY AND CHA

RACTER.

III. RIGHTS OF PROPERTY.

IV. THE IRISH LAND ACT, 1881.

V. FOREIGN DEBTS IN LONDON.

VI. THE DOUBLE STANDARD AND THE NATIONAL DEBT.

APPENDIX.

I. GOLD AND PRICES, being Letters published in the Economist, in 1894, on the Quantitative Theory, the interpretation of Index Numbers for the average prices of commodities, and the distinction between Price and Value.

II. INDIA AND THE ROMAN EMPIRE.

INDEX.

CHAPTER I.

LORD LIVERPOOL'S OVERSIGHT AS REGARDS THE STANDARD OF VALUE, AND ITS CONSEQUENCES!'

A LETTER addressed to King George III. by the first Earl of Liverpool was the prevailing influence which induced Parliament to abolish the double standard and to make the gold sovereign the sole representative of the pound sterling; and the present mint regulations, which were established by Sir Robert Peel's Act in 1816, are in exact conformity with the principles advocated by Lord Liverpool in that letter.

My present object is to point out an oversight made by the Earl of Liverpool; and also the very pernicious effects it has recently begun to produce.

To illustrate the oversight in question I will quote from Lord Liverpool's letter an extract in which his principal argument is clearly stated.

Lord Liverpool says:

'Coins must bear a due proportion to the wealth and commerce of every country in which they are current. In former times it was found necessary gradually to A Paper read before the English Literary Society of Buenos Ayres on the 14th of June, 1882, in support of the following resolution: The ' restoration of the Double Standard of Value, which was discarded in 1873, is desirable.'

introduce into the currency of this kingdom, silver coins of a greater weight and value, in proportion as the wealth and commerce of it advanced. Thus pennies, halfpennies, and farthings were at first the only silver coins in currency. In subsequent periods, first shillings, and afterwards crowns and half-crowns, were coined, and for the same reason brought into currency. In like manner, when the commerce of the kingdom had increased to a certain extent, coins made of gold were first struck at the English mint, and introduced into circulation. It was natural that gold coins, as of less bulk and of greater value, should be so introduced, and should become legal tender equally with our silver coins; and, in proportion as our commerce continued to augment, that they should gradually take the place of the silver coins; and at length, when our trade had attained the very great degree of extent and splendour at which it has arrived in the course of the last fifty years, that they should become the principal measure of property.'

The oversight which Lord Liverpool seems to have made is that he does not appear to have perceived the intrinsic difference between the character of a change by which silver crowns displace silver pennies, and that by which gold sovereigns displace silver

crowns.

By the changes from silver pennies to silver crowns the value of the silver of which the coins are made is not affected, and therefore the value of the standard unit remains unaltered. But the effect of a change in the coinage is very different when it is decreed that (except a small amount issued at a fancy valuation for

small change) silver coins are to be abolished and substituted by gold coins.

In the latter case the demand thus created for gold to supply the circulation which would otherwise be supplied by silver, gives gold a higher value than it would otherwise have; and, therefore, the decree which substitutes gold coins for silver coins at the pre-existing ratio raises the value of the standard unit.

This principle, apparently overlooked by Lord Liverpool, I do not suppose anybody, whose attention has once been directed to it, can fail to perceive to be true in theory, however slight its practical effects might be. Before endeavouring to show to what extent the value of the standard unit has been raised by the abolition of the double standard, I beg to draw your attention to a special reason why any change in the standard of value ought at that time to have been strictly avoided.

For the above purpose I cannot do better than refer to the conversation which took place between the representatives of the International Congress for the Simplification of Coinage which met in Paris in 1867, and Mr. Goschen, then Chancellor of Her Majesty's Exchequer.

It was suggested by the above-mentioned Congress that the weight of the English sovereign should be reduced sufficiently to make twenty shillings exactly equal to twenty-five francs. This would be so slight a reduction that the suggested new sovereign would still be heavier than many of the sovereigns which, though worn by ten or twelve years of use, are nevertheless not so much worn as to cease to be of full legal-tender weight.