of the metal in London, or any fears of economic disturbance consequent on a supposed diminution of its permanent value in the world, but the in-pouring of Silver from Germany which overtaxed the powers of the French Mint, and compelled it, as might have been expected, to lessen its output. It is abundantly clear, also, that by that suspension and the cessation of the fixed Mint price, the price of Silver in London was driven from its moorings and suffered to drift hither and thither, and finally fall as low as increased supply and diminished demand could send it.
I think I have now disposed of the allegation that the great fall in the price of Silver was the cause and not the effect of the closing of the French Mint, by showing (1) that such fall in Silver as occurred prior to August, 1873, was well within the limits of variation, which a bimetallic money law not only permits, but assumes, where there is substantial alteration in the circumstances of international supply and demand.[1] (2) That if the law of 1803 did nothing to prevent this fall, it was only because the price, notwithstanding the fall, was always above that which the French Mint at the existing exchange could offer to the English holder, and (3) that such fall as did take place was far too insignificant[2] to cause the French Government to contemplate the limitation of their coinage of Silver, whereas they had ample reasons for their act in the unprecedented influx of Silver from Germany, which, under the then condition of the law, was a forced import, onerous to their Mint and profitable to Germany.
I may admit that there is a theoretical possibility that there might be no Gold in France, and that consequently there might be no 'Gold point' at which the rise of the exchange must cease; but practically it is a vain imagination. The only need of Gold is to rectify, from time to time, and instantly, a rising exchange—an exchange unfavourable to France; but the absence of Gold could only have any permanent effect on the value in England of the frs. 6·34033 per ounce on the assumption that there is no
- ↑ Some people seem to suppose that an adjustment between the two money metals is effected without the existence of a commercial motive. Variations and disturbances must occur; but the merit of a free coinage law applied to both metals is that, acting in no mysterious way but through the pressure of ordinary commercial motives, it both limits the extent of the variations and opens the way to their correction. It acts, as has already been said by others, like the governor of a steam-engine. It checks tendencies to irregularity of action, but it cannot check them until they begin to show themselves. In one case as in the other though we do not get absolute uniformity, we get uniformity which for all practical purposes is complete.
- ↑ The fall was but ½d. per ounce, as I have said above, and at no time within that twelvemonth could Silver bought in England have been remitted to France for coinage without incurring a loss, owing to the high exchange.
