The news & observer., 1897-05-06

Messrs Gibbs and Grenfell, both gentle
men whose business hours for years past
as merchants trading with South Amer
ica have been devoted to exchange opera
ton of the most extensive kind. And a
gain. in the March number of the alton
al Review, there is an admirable paper
from the pen of Mr.. Faraday, the city ed
itor of the Manchester Guardian. There
is no economist who writes with more au-
thority than MIR. Faraday, editing, as he
does in Manchester, that center of ex-
change complications, the most important
commercial newspaper in the United
Kingdom. And this is Mr.. Faraday's
statement in the National Review, writ
ing of the recent election he Declares
Il made it my business to inquire from
the merchants on both sides of the cur
fency controversy, who are most familiar
with the workings of the exchanges, and
| did not find one who believed that the
free coinage of silver would have involved
q serious, or more than very temporary
depreciation of the American dollar
The all-important point in this connec-
tion to consider-a point which it seems
to be never contemplated by the leader
writer's for the gold press on your side, is
this: Would free coinage in your country
secure you u balance of trade-Such
balance of exports over imports as would
make it easy for you to pay your debts
and keep your gold at home? If free coin
age would do this, then your currency
troubles are at an end. And it is here
that the real object lesson of the closing
of the Indian mints comes home to us.
Our government in 1893 closed the mints
of India and refused to sell their rupees
to our importing merchants except at a
price % per cent. higher than the bullion
value of the silver in the rupee. In other
words, we deprived India's export trades
of that advantage-a depreciating cur
rency, which some Of us theOrized as be-
ing the true reason why year after year
she had secured trade balances SO extraor
dinarily favorable. And what followed
the rise of exchanges? The exports Of
India, no longer stimulated by cheap
money. at once fell off enormously; the
balance of trade for the first time in
twenty-five years, went against India,
and the government of India was obliged
to borrow ten millions sterling in London
in order to pay their way. Thus our at
tempt to raise the Indian exchanges, and
this our first step in the direction of
gold standard for India at once and as by
magic crippled the exporting capacity of
India, destroyed her exports to China and
Japan, and started in those countries an
era of prosperous manufacturing directly
at India's expense. Can it be doubted
that what our government did in India
in 1898. that by entirely similar legisla-
ton your government has been doing in
the United States ever since 1873? You
have appreciated your currency, thus
l. :. Ii
export, and you have at the same time
and by the very same means, lowered the
rates of silver exchange for all Asia, thus
enabling Asiatic myriads to export TO Eu-
ropean markets on terms involving for
your farmers and planters a truly muir
derous competition.
Can any problem. then, be more inter
estiug than this? Our government did in
India, when closing the mints, exactly
what your government would do for India
if you opened your mints-namely, they
made, as you would make, the rupee
dear; at once the effect of this dearness
showed itself in the paralysis of the ex-
port trades of India.
But, more than this, free coinage at
your mints would do what the action OF
our government failed to do. You would
make not only the Indian rupee dear"
but also the yen, the tael, and the dollar
of the Malay peninsula, and you would
also, ipse facto, reduce the gold premiums
in Russia. in Brazil, and Argentina In
other words, free coinage, or better still,
If it can be secured, a bi-metallic agree
ment including other nations, would
great expand the exports of
the United States at the expense of those |
exports at present coming from Europe |
from those countries which are to-day |
bonused by the depreciation of their cur |
rencies. And this is the one and only diff |
ficulty which to-day comes between you |
and great era of prosperity Yan can
not export the produce of your farms |
without stress and strain. if gold prices |
in Europe are to remain SO low as at pres
ent. And gold prices here cannot rise so |
long as they are hammered down by the |
competition Of exports from those coun- |
tries which are afforded a bonus by pre- |
MUM on gold. Neither can you meet this |
difficulty by raising your tariff against |
the commodities which you import from |
those countries, because just in that pro- |
portion i'll which you reduce their ex- |
ports by high tariff you will increase |
their gold premium, so that again their |
exports will expand
/ should apologize for so long letter |
on a subject very important and very |
dull. But the financial problem with |
which you are graphing is this-how to |
secure annually an excess of exports over |
imports, to the amount of some three |
hundred millions, representing your debts. |
your freight charges, and your travellers |
expenses. This balance would accrue to |
you without any effor, on your part if
only the European exchanges with Asia |
were at anything near their old parity
thep arity of ten rupees to the pound |
OF four taels to the pound, of five yen
to the pound. Your problem then is,
How are you to so influence the exchange
rates with Asia as to secure this parity ?
Senator Wolc0tt on his recent visit to
England has succeeded at least so far:
he appears to have convinced her majes-