Readings in Money and Banking: Selected and AdaptedPhillips, Chester Arthur
General
Readings in Money and Banking: Selected and Adapted
Phillips, Chester Arthur
Banks and banking; Banks and banking -- United States; Money
We now have to note ... that every additional State which joins the
bimetallic group, having the same mint ratio between gold and silver,
does not only share the cost or the burden with those already in the
system, but diminishes the aggregate cost or burden to be borne, and
this, not in a slight, but in an important degree, so that should the
monetary league become general, the total cost or burden to be divided
among the many allies would be inappreciable; while, should the system
come to embrace all commercial States, there would, in theory, be no
burden at all to be borne by any one.
Thus let us suppose the commercial world to be divided into sixteen
States, A to P, inclusive, the first six having the single gold
standard, four, G to J, the so-called double standard of gold and
silver, say at 15-1/2:1; the remaining six States having the single
standard of silver, thus:
A, B, C, D, E, F (G, H, I, J), K, L, M, N, O, P.
It is evident that in the case of a change in the conditions of supply
tending to cheapen silver relatively to gold, the new silver would pass
into the countries of the double standard, G to J, be there exchanged
for gold at the rate of 15-1/2: 1, with some small premium as the profit
of the transaction, and the gold would go to the gold countries, A to F,
in settlement of trade balances.
The rapidity with which this substitution of silver for gold will go
forward will depend, first, on the force of the natural causes operating
to cheapen silver, and, secondly, on the force of the commercial causes
operating to maintain or advance the value of gold. The length of time
during which the drain of the dearer metal can be sustained without
exhaustion will (given the rate of movement) depend solely on the stock
of that metal existing in the bimetallic States jointly when the drain
begins.
But chief among the commercial causes operating to maintain or advance
the value of gold is the exclusive power with which gold is invested by
law to pay debts within States A to F; while the stock of the dearer
metal available to sustain the drain described is made up, not of all
the gold in the sixteen States A to P, or in the ten States A to J, but
only of the gold in the four bimetallic States, G to J.
Hence we see that for every gold State which adopts the "double
standard" the amount of gold available, in the case of a cheapening of
silver, to meet the drain of the dearer metal (on which the virtue of
the bimetallic system depends) is increased; while the demand for gold
in preference to silver at 15-1/2:1 (the only cause which threatens the
stability of the bimetallic system) is, in just so far, diminished. On
the other hand, every silver State that adopts the "double standard"
strengthens the bimetallic system in the case of a cheapening of gold.
Let us suppose the sixteen commercial States to be divided as four gold
States, eight gold and silver States, and four silver States, as
follows:
Public-domain text, read in full here on John Shaqi.
Reviews
Reviews
No reviews yet
Be the first to share your thoughts on this work.
Elsewhere in the archive
Join the Discussion
Join the discussion
Sign in to leave a comment or review.
Sign InorCreate an account