The Superior times. [volume] (Superior, Wis.) 1870-1912, 1896-09-26
A Knock Down" Argument
Knocked Down.


The following illustration" or prOpo-
sition is laid down by the Hon. Joel
I f. Vale, law partner of Senator VOL
colt at Denver, Colo, in his published
pamphlet of some ninety-six pages en-
titled Elementary Facts Bearing on
| the Silver Question"
The United States and England be-
ing alike on a gold basis, let bale of
goods be sent from the United States to
/ be sold in England. on which, if 900
! Including transportation and commits
! SION be realized, 1t ls profitable al
! fair. To obtain this amount, the goods
! must be sold i'll London at =, 200 pounds
sterling converting the poundatS5). The
| United states having changed its none
tary policy, let US assume that gold rises
| to a premium of l0per cent as compared
| with the silver and paper currency of
| the United STates. Again, our merch-
ant ships bale of goods to London on
which, as before, if he obtains $4,000
! he realizes profit. He can now sell
these goods on the London market for
ISIS pounds and make the same profit
az before.
"On the other hand, both countries
being on a gold basis, let the English
merchant send bale of goods to the
! United States, on which he must rea-
| lie 1000 pounds sterling. He obtains
| it by selling at $4,000 in this country.
| Upon gold going To- a premium of 10 per
cent. in the United States, he must,
/ however, In order to make the same
! profit, sell the same goods here at
| $ll ,OtU. The prices of English merch-
andise must be increased ~ per cent. in
30 -
| realize the same profit IS before; but
! the prices of American products selling
in England may be lowered nearly ten
per cent, and the seller derives the
same profit az formerly. So far as the
| matter is affected by the premium on
gold, We can undersell the Engis Imam
in both markets, and we obtain the
like advantage in every other market
in which we compete with him."
Mr.. Vaile's proposition is considered
a knock-down argument by the free
silverites. The Ponce Press, upon re-
quest of a reader, gives its views in the
following editorial
Mr.. Wales knock-dOwn argument is
sheer nonsense. The statement is that
! the American merchant, who, while the
]
ship bale of goods to London and sell
! them for $40, 900 at a profit, would realize
! the same profit if gold was at a prem
ium of 10 per cent by selling them in
London at 1901 in gold. This is alb
surd.
/ In the first transaction, both cOun-
tries being on the gold busis, when he
sold his goods for $4,000 in gold and
/ brought it back to this country it was
worth $4,000 in gold at home, and
would purchase any commodities in
which he wished to invest at their gold
| prices. But in the second transaction,
| gold being at a premium of 10 per cent
/ in the United States, when he brought
/ back his $909l in gold it would be
worth $4,000, not IN gold, but in silver;
and as all commodities in the Ameri-
! can market would have risen 10 per
! cent. with the premium on gold, this
! $4,000 in silver would purchase only
about 81 per cent. of the commodities
I which he could have purchased with
| $4,000 in gold received on the first
! transaction. So that, instead of gaining
1919, as Mr. Vale figures it, he would
lose the amount by selling his goods for
| that much less than he sold them for
when on the gold basis Any school
/ boy fourteen years old would know bet
ter than to figure out a profit on the
silver basis IN this way.
| The small boy could have told Mr..
| Vale that in order to come out even in
/ the second transaction he would have
to sell his bale of goods in London for
1 the same gold price as before-e2 900 or
| $4,000 in gold. When he brought his
$4,000 back to the United States. sup
| posing gold to be still at premium of
| 10 per cent be. could convert it into
81 900 of silver. This 81 900 would
purchase the same amount of goods on
the silver basis that the $4,000 would
purchase on the gold basis. So that.
surprising the premium on gold to re-
main always stationary, there would be
no loss on the transaction.
But if we went to silver basis the
premium on gold would not remain
stationary. 1t has hardly ever been
stationary for three days in succession
for twenty years. Instead of 10 Der
cent, If we went TO a silver basis the
premium on gold would be about 90 per
cent, and fuCutate every day or two.
In every Transaction this constantly
varying market price of silver would
have to be taken into account; Every
dealer IN merchandise. or securities
and the money brokers who EXCHANGE
gold for silver or silver for gold. would
be constantly watching the London
quotations of silver in order to adjust
their prices according to its rise or fall
as the case might be.
When, therefore, the American mer-
chant sold his bale of goods in Jondon
for gold he would have no difficulty So
far. But when in London he under-
took to buy exchange on New York his
troubles would commence. IF his ooId
was at premium of 80 per cent on
Thursday it might be s. or 90 per cent
on Friday. The broker who sold hi,,
the exchange would not paw him the
premium OF that day, but would add n
the price of the exchange a sum sufFic-
lent to cover the risk involved in these