The Democratic advocate. [volume] (Westminster, Md.) 1865-1972, 1894-02-17
GOING TO A GOLD BASIS.
How the Process Will Affect the
United States.

As strong a thinker as Ricardo said that
going to gold basis in England, after the
Napoleonic wars, was only matter of ;
per cent. difference between Bank of Eng
land notes and gold He lived long enough,
however, to discover and acknowledge his
mistake He did not take into account the
change that must take place in the value
of gold itself, consequent upon the compe-
tition for gold that would follow the re-
sumption of specie payments by England
and other countries that had displaced gold
by the issue of inconvertible paper. The
} per cent difference proved to be insig-
nifcant as compared with the change that
took place in the value of gold itself.
So now it is generally assumed that al
ready we are on gold basis; that the
money standard is settled at last for Europe
and the United States, at least. and that as
soon as confidence is restored prices will
become settled and business be established
on sure foundation. But are We sure
that the "gold basis, under the conditions
that exist now, is any surer than it was in
1916?
As during the resumption period follow
ing the Napoleonic wars, the competition
for gold and its redistribution over Europe
changed the level of gold the world over
in like manner will not new competition
for gold, consequent upon the exclusion of
silver from money supply for India and the
United States and the extension of the sin
gle gold standard to Austria Hungary,
change the gold level to as great an extent
as the change in the early part of the cen
fury, or as that which resulted from the
act of 1873? The extent of the apprecia-
ton of gold under these new conditions
cannot be foretold but the changes made
in the monetary situation during 1898 have
been the greatest in the worlds history,
and have added more than 800, 900, 900 of
people to the number heretofore competing
for gold for money supply, which cannot
otherwise than materially affect the value
of gold the world over
II.
But whatever may be the effect Of this
change on gold, one fact may as well be
accepted first as last, for it cannot be es-
capped that is, if gold is made the pricing
instrument, the results of this measurement
must be accepted. In other words, we
cannot have the single gold standard and
at the same time maintain range Of prices
inconsistent with this standard The idea
that we can have a gold standard and then,
by tariffs. or by selling bonds, or by issuing
more currency, or by expanding bank cred
its, maintain range of prices inconsistent
with the standard itself, might as well be
given up first as last, for ii must be given up.
Many people, and among them moi a few
bankers, seem to think that if we have a
gold standard it makes little difference
about the quantity of gold there is in a
country or in the world. 1t is quality and
not quantity, they say, that concerns us.
in the minds of such people single lump
of gold, weighed, marked, and kept, like
the pound weight, in the archives of the
Government, is all that is required. The
rest may be credit or anything. Butwhen
the Barring failure threatened the reserves
Of the Bank Of England there was no ques-
ton about the quality of its gold or its
other money; it was quantity that was
wanted. 1t was sovereigns, or whatwould
make sovereigns that the Bank must have,
and the Bank of France was accordingly
appealed to- not to make good any defect
in the quality Of the gold or of the money
on the British side of the Channel, but to
supply pounds sterling. Indeed, one might
as well expect to sail ship on faith, only
touching the water now and then, as to ex- /
pect to conduct the vast business of the /
world On confidence, referring only now
and then to gold as standard of value
\ vessel may ride for moment ON the /
crest of a wave or sink into the trough, /
but it can safely rest only on the level sea.
So business may be temporarily supported |
by confidence" and prices be lifted up on
the high waves of credit, but settlement I
day will come, and when it comes the tum-
bic begins and ends only at the price level /
of gold. We cannot ride always from
crest to crest of credit waves.
II, therefore, we decide to 90 to a gold /
basis, we must go there, and as gold grows
dearer as the result of increased demand
for it, prices must follow in the opposite
direction; and all attempts by legislation
or by devices of any kind to maintain
range of prices above the level of gold must /
in the end prove futile. We might as.well
propose to increase the size of the bushel
measure, and at the same time expect our
wheat crop to show just as many bushels,
or to declare that an hour shall hereafter
contain 12O minutes of 60 seconds each,
but that there shall still be "a hours in
day.
The sooner, then, it is understood that
with the single standard of gold it is inn
possible to have a large volume Of currency,
expanded bank credits, and high range
of prices, all at the level of gold, the better
it will be for all Interests. These conditions
do not belong together and they will not
stand together If with the. bimetaIlic
standard given volume Of paper currency,
with proportionate expansion of bank