THE FALL IN THE PRICE OF SILVER.

Globe, Volume V, Issue 595, 16 May 1876, Page 3

THE FALL IN THE PRICE OF SILVER.

Recently Mr Erne3t 83yd read a paper to the Society of Arts "On the Fall in the Price of Silver, its Cause 3, its Consequences, and their Possible Avoidance, with Special Reference to India." The paper was of great length, occupying more than two hours in the reading, and, in fact, formed a com(jlete (realise on the subject. After premising that the recent heavy fall in the value of silver has become a pressing topic in England, because the equally great decline in Indian exchange causes heavy losses, not only to those who have investments in India or fixed incomes therefrom, but to merchant and others dealing with the East, Mr Seyd proceeded to discuss the subject under three heads—l. Specie payments and their recovery. International wealth and international indebtedness. 2. The main question of the valuation and its present evil position. 3. Suggestions for restoring the equilibrium in the valuation From 1819 to 1848 all nations whose exchanges we cared to quote on our market, and which had made over issues of paper money, and suspended specie payment, came back to the par of exchange on metal. Since then the following States -.—England, G*r many, Holland, Belgium, Switzerland, Denmark, Sweden, and Norway—have maintained their metallic parity; France, only for a short time (1872) nominally departed from it, and is now stronger than ever ; but the four following nations -.—Austria, Russia, Italy, and the United States—made over issues of paper money, so that specie pay-

merits had to be suspended, aud they hav not as yet recovered them. He estimate that the over isming states nvißt oWai from the general stock of money 150 millions in order to enable thetn to return co i specie basis. Passing then to the second head, the main question of the valuatioa an< its present evil position, he showed that thf characteristic of the gold valuation as re gards silver is that for the purpose of makinp gold the effective legal tender, the tender o payment in silver must be restricted. Th effect of this limitation is that comparatively little silver can be used, and so while oui total circulation is 162 millions, there ar< but 15 millions of silver. Hence our silve: coinage is token money, and at the present price of silver 53£ pence per ounce, a shilling of the nominal value of 12d is worth abon' 9J pence in metal. At the present tim. there are 200 millions of surplus silver in Europe which must be demonetised, and the question was what was to become of it. India and the East can absorb but a limited percentage of the amount at the best. India has already 250 millions. And there was this consideration that if the price of silver falls much lower it will not only cease as legal tender money, but it will also be impossible to maintain it as material for the subsidiary tok'n coinage, because coins may then be made at a profit by others than the Mint, of precisely the same metal. The fall, however, he considered was inevitable. In const quence, while the total money now in use, including bank notes, is 2015 millions, the future available legal tender money will be only 1080 millions. The question arose, " What will be the effect of these reduc'ious in the circulating mediums on prices, on commerce, and on civilisation ?" This was the far graver part of this enquiry ; exceeding in gravity the mere fiscal or national loss which the filver-holding nations would experience if by some stroke all the legal tender silver they now hold were to vanish away bodily. Some guiding idea for the appreciation of this effect might be formed on the experience made in the other direction, vis;, the rise in prices, and extension of commerce from 1848 to 1872. In 1848 the whole metallic curreucy of the world was about 1000 millions. Then new supplies from California and Australia brought up the amount to 1400 millions—an increase of 40 per cent in twenty-seven years. During the same period, also, the woild'a progress and development of commerce have made great strides. Our outward trade has increased from 165 millions in 1848 to 682 millions in 1873, and this more than fourfold increase has been participated in by many nations. "If an addition of 40 per cent to the existing stock of money, from 1848 to 1876— i.e., in twentyeight years— had so materially (fourfold) advanced progress in commerce, if all contracts now rest on the basis of prices thereby established, what will be the consequences if that stock of money becomes reduced in the manner the change in the systems of valuation must bring about?" The first effects of the enforced diminution of the number of pieces, through the demonetisation of silver, of legal-tender money in the world will be the stoppage of works of public utility, in which the combination between capital and labour has done so much during the last twenty-five years. Simultaneously, the availability and value of labor will decline, and wages as well as the production and consumption will become less. The value of all property, lands, houses, and commodities of all kinds, must also decline, and so tie rich will suffer equal loss. In order to avert theßC evils, he suggested au alteration in the Indian coinage towards a starling system, and that there should be an international conference, in which Englaud should take the lead, the first object of which must bo that of restoring the equilibrium between gold and silver in Europe.