The News-Herald. [volume] (Hillsboro, Highland Co., Ohio) 1886-1973, 1891-09-24
The Difficulties In a Double Standard


A valuable lesson on the unforeseen
| difficulties that may arise from the fiuct-
uations of two metals, which are sought
to be used as double standard of values,
is derived from a transaction which took
place between the banks of France and
England in the fall OF 1850 At that
date silver was scarce and was held rel
atively dearer than gold. The Bank OF
France then held bullion reserve of
$S5, 900, s2O,OOO,0OO in gold and $685.
100000 in silver. The managers of the
bank proposed to sell some of this silver
for gold and thus realize the profit, but
Napoleon Ill, to whom the accounts of
the bank were constantly submitted,
would not permit this policy. The Bank
of France therefore exchanged $4,000
600 of silver for $4,000 900 of gold with
the Bank of England. The transaction
excited great deal OF discussion at the
time. Why the French bank should
exchange this large sum with an English |
bank instead of paying it to her custom
ers, who were anxious to draw it, was
beyond the comprehension of most |
financiers and was generally regarded |
as part Of the policy of the Emperor
to secure the support and good will of
the English Government even at the
expense of his own people. The London
Economist, November "a, 1860, explained
the motive of the transaction in an edi.
torial, which we quote:
The Bank OF France, for very sufficient
reasons, prefer discharging their liabil-
tiles in gold instead Of silver. If they
were to pay noteholder Gl 900 in silver
he could Immediately sell the silver in
the market for gold, and gain substan.
tial premium by the transaction accord.
ingly, the managers of the bank appre.
hend that if they began to discharge
their liabilities in silver there would be
run upon them Immediately for the
sake Of this premium. ''If every note.
holder knew that he could obtain an
appreciable percentage on his note, by
getting it changed, depend upon it,
they say, "he would get it changed.
The same causes which have drained the
rest of France of silver Except for the
smallest purposes and of insufficient
quantities even for those purposes)
would begin to act upon us also; in
short time we should be drained of
the whole of our thirteen millions
(pounds) of silver"
In this case it required the imperial
edict OF usurper, acknowledged to be
the most despotic monarch of Europe,
to prevent the relatively dearer metal,
silver, from becoming an object of spec
ulation, from going out OF ejaculation,
and being held and sold for the premium.
What power is there in this country
that could prevent the 500 600, 900 OF
gold we will soon have from becoming a
of speculation and going out
OF circulation if our government should
allow the free coinage of silver, now the
cheaper metal? The great problem of
the French financiers all through the
sixties was to preserve their silver.
The object of the Latin Union was to
advance silver, to throw safeguards
around it and to keep it in; circulation.
It was not, as the poorly informed silver
advocates contend, combination of
nllilonaires to discriminate against
silver In the interest of wealth. The
I'D and oft recurring difficulty under Y
he foolish attempt to maintain two
tandard metals was then before the
french fnanciers. The relatively cheap.
n metal was driving the dearer one out
If circulation and in this case it was I
old that was everywhere expelling sill
'er. 1t was called a double standard
nd yet every stratagem was resorted to S
order to confine business to the use
# one metal alone. As the London
economist said in the article from which
'e have quoted, "the metal which is
deprecated will come into ex- t
lusive use; people will pay their debts @
the least valuable metal, not in the :
lost valuable-in the medium which
hey can obtain most easily, not in the
ledium which they obtain less easily"
mother feature worthy OF note in this 9
ansaction is that by attempting the
npossibae task of maintaining double a
andard, one metal is sure at some time =,
become more valuable than the other, '
he Bank of France had S65,OOO,OOO of
liver reserve which it dared not use any
art OF for fear of being deprived Of it IL
at once. 1t was withdrawn from cir. a
llation as fully az If IL had no ax;ston,o