FACTS AND FIGURES ABOUT THE CRISIS



AU rights reserved by the author



FACTS AND FIGURES ABOUT THE CRISIS
BY
H. DUNLOP
with a foreword by
SIR HENRI W. A. DETERDING
Published by H. J. PARIS — AMSTERDAM







CONTENTS
BOOK I GOLD
CHAPTER Page
I. The changing value of gold 9
II. The post-war camouflage of the scarcity of gold . . 23 BI. The „maldistribution" of gold and the current falla-
cies as to lts causes 27
IV. The American tariff banier. Has America refused to accept
goods In paymeiit of War Debts? ... 38 V. Has America refused to accept services in payment of
War Debts? 52
VI. Has Francc refused payment in goods and services? . 60
VIL Rubber in World Economy 63
Vin. The Anglo-American War Debt controversy ... 66
IX. The two precious metais 72
BOOK n SILVER
X. Bird's eye view of the history of silver. Ratio between
silver and gold. Ratio of value and ratio of production 83
XI. Bimetallism. The Latin Union 88
XII. The United States and silver. The post-war demonetiz-
ation and debasement of silver token money.
Mr. René Léon's plan for Bimetallism. . . 92
XIII. The Indian currency problem ...... 97
XIV. India and the Gold Standard. Indian and Chinese losses
on silver exceed 500.000.000 Sterling . 100
XV. India's gold hoards, Bimetallism for India. The chief
Silver producing countries 105
XVI. The effect of the jettison of silver on the Chinese exchanges
and on Chinese trade. The gold mentality at its worst. South Africa „off gold" .... 107
XVII. The wanton destruction of the value of silver. Evil
effect on actual and potential trade with China. Increase of world trade since 1913 . . . 112
XVIII. The new Bimetallism . 117
XIX. Forty years ago and now 120
XX. Symmetallism. Empire Currency ..... 124
XXI. Other monetary standards, not based on precious metais 139
XXII. Conclusion 143



FOREWORD
I have much pleasure in herewith recommending Mr. Dunlop's book to any unbiassed reader.
lt is my firm conviction — which during the last few years has grown stronger and stronger •*» that goldmonometallism stands condemned by the brutal facts which for some time have been confronting the world.
The advocates of the universal gold Standard have to admit that there is not enough gold to go round as it is and that the various devices which have been adopted to make up for the shortage have failed; and yet they refuse to realize that as soon as normal conditions are restored in such large countries as China, Russia and South America, all of which are admittedly countries of the future, the already existing gold scarcity is bound to become much worse than ever bef ore.
In order to bolster up the prevailing gold-mentality, which is already showing many traits of fanaticsm, they either refuse to discuss silver on its merits, or they spread obviously misleading information on the production and consumption of the white metal.
Apart from this I ask whether Great Britain, America and other countries of the West have acted fairly in first selling enormous quantities of silver to those of the East, prior to 1920, at best possible gold prices (which transactions by themselves were quite legitimate) which silver, by their own action, they subsequendy caused to decline in gold value by over fifty percent, owing to the wanton demonetization of silver, first in Europe and afterwards in India? I ask whether it is possible to dehy that the demonetization of silver in



India was carried out against the advice of the Governor and the Director of the Bank of England?
In their joint evidence bef ore die Royal Commission on Indian Currency and Finance in 1926 these gentlemen, in fact, declared, intec alia:
„...The immediate effect of the announcement that the Indian Government contemplated the sale of a large quantity of silver would be to throw out of gear the exchanges with China, and, for a time, to paralyse trade with that country...
„...We think that one also has to bear in mind the interaction between gold and silver prices.
„There is a reaction upon gold prices when an extreme fall or rise takes place in the value of silver, which is none the less serious because it is indirect and not very apparent on the surface. The consequential changes in prices generally and in trade conditions which would be produced, the disturbance to the world's economie peace and confidence, the interference with the long-established social habits of the people of India in the use of silver as a medium of currency and a common store of value could not fail to have important effects upon the gold prices of countries in Europe, and, indeed, in America."
Surely, now that this prophecy has come abundandy true, it should have caused better councils to prevail and the machine to be reversed.
Unfortunately, however, finance, since the Great War, has been in the hands of a few short-sighted theorists, who are evidendy ashamed to admit that they have been in the wrong. Their lack of moral courage is the chief cause of the present perplexities of the world.
The gold affliction, that poisonous conviction by which the gold-maniacs are ruining trade, and international trade in particular, is based as has to be universally admitted, on absence of fairness by maintaining that debts which were contracted in gold some years ago should be repaid by twice the original quantity of goods. Thus gold protects the creditor



but must ruin the debtor, involving both finally in a common catastrophe.
Again, tariffs, and especially the American tariffs, are said to be the cause of our troubles. As to the former, they are largely a result of the crisis, not the cause of it, and as to the latter, it is demonstrated in this volume by statistical proof that they are nothing of the sort. The excessive tariffs of the last few years are in fact due to the destruction of the value of silver and thus of the purchasing capacity of some 900.000.000 people.
As to over-production, I hold that there can be no such thing as long as hundreds of millions of people all over the world —and especially in Asia and Russia — are practically destitute. There are many men who would like to work hard in order to obtain a radio set or a gramophone or a car, but there are hundreds of millions who would be more than thankful for an extra pound of flour or sugar or tea, or an extra garment, all of which commodities modern science produces in an abundance such as has never been known before.
Are these people to starve in order to please the vanity of our gold fanatics and economie wiseacres, who have nothing to their credit, but who are responsible for universal distress amid universal abundance? Can they deny that the gold Standard, after sixty years of trial, has resulted in a general paralysis of trade?
In The Times of the 9th February last I read, with regard to the silver problem:
„It remains to be seen wether any workable scheme to raise prices artificially will be produced".
In this connection I wrote to the Editor of that paper (Times. Feb. 18th., 1933) as follows:
„As I have been a supporter of the re-establishment of a proper price for silver, I beg to state that my conviction is that no „artificial" scheme will ever do any lasting good. The fact is that the value of silver has been reduced



artificially simply because the legitimate demand for the metal has been artificially curtailed by so many countries: for instance. Great Britain and Holland have debased their silver coinage from about 900 fine to about 500 and 700 respectively. thus reducing the demand for silver for coinage purposes which in the past was required when silver coins were „real" silver coins.
„This artificial reduction in demand is exacdy the same disease as the present so-called „over-production". which is simply caused by artificially creating under-consumption. The low price of silver is largely — if not wholly — responsible for this under-consumption, as it has reduced the purchasing power of about 50 per cent, of the workl's population, i. e. the inhabitants of British India, China etc It has in fact done more than this, in that Japan, having recently adopted the same Standard as China, is now in a position to compete more fiercely than ever for trade which the European countries have been accustomed to do with Fax Eastern countries; hence the enormously cheap Japanese cotton goods of which Lancashire has feit the effect.
Unemployment in England is therefore dosely connected with the artificial reduction of silver consumption".
Finally, I challenge all those whose minds are not obscured by gold fanaticism to prove anything against Bimetallism in History that could be even distantly compared with the present perplexities of the world. S t. Moritz
March lst. 1933 H. W. A. DETERDING



PREFACE
Having published several treatises on the problem dealt with in this volume in my native Dutch language, it was thought expediënt to publish the present treatise in English, the problem being a worldwide problem.
Although I have been obliged to deal in some detail with the question of the American tariffs, I would point out emphatically that I hold no brief for the United States any more than for any other country, being of the opinion that the World Crisis must be looked at from an international point of view.
In this treatise I have dealt chiefly with the years 1929 to 1931, the former being the last „normal" post-war year, the latter being the year during which the crisis had begun to develop into the collapse of 1931—1932.
I have done so, because the collapse is of ten attributed to the various customhouse barriers, rationings and other emergency measures which were preceded and more or less inaugurated by the Smoot Hawley tariff in the United States. That tariff, in itself, was an oatcome of the growing crisis and not a cause of it.
It is of the utmost importance to keep cause and effect distinct because the abolition or mitigation of those measures, whilst possibly proving useful to aid recovery owing to their moral effect, cannot remove the primary cause, which is the scarcity of monetary gold before the crisis began, coinciding with the increased output of commodities and the destruction of silver as a measure and a store of value.
I do not apologize for the frequency of statistical tables in this treatise, for to the student of Economics they are as indispensable as time tables to the traveüer.
Brummen, Holland, March 1933
H. DUNLOP



BOOK I
CHAPTER I THE CHANGING VALUE OF GOLD
Weight, length, volume (of gas or water), electric current, time, are measured by units which, in themselves, are not length, volume, current or time. These measures are not material, they are incorporeal. A yard does not alter in length by an increase in the quantity of available cloth. A pound does not alter in weight by an increased quantity of available surgar or tea or meat. A cubic foot does not alter by an increase of gas or water, and not all the water in the Ocean will make it hold a millionth part of a cubic inch more a less.
The value which men attach to goods is also measured, but unlike other measures, our measure of value, which for a large part of the world used to be gold, and for another large part silver (which it still is in the case of China), possesses value in itself, in that it is scarce, especially gold, does not rust, may be divided up into extremely small parts and possesses a fine lustre. These are some of the reasons why everybody wants precious metais, particularly gold.
There are, however, other reasons. The very value which men attach to gold has caused it to be esteemed particularly for coinage and as a store of value. In the eyes of men it is so valuable, that a very small quantity of it may represent a very large quantity of commodities. As a store of value, for concentrating a great deal of it in a small compass, e. g. 7 tons of coal in an ounce of gold etc. (see the table on. p. 17), it is unsurpassed, except, perhaps, by precious stones.



It is a curious fact, that for all material things we have IMmaterial measures. But for that IMmaterial thing, which is value, we have a material measure: gold or silver. Perhaps, in the fulness of time, the world will adopt some IMmaterial measure of value, such as Horsepower. Kilowatt, etc, If the problem of concentrating a large quantity of electricity in a very small accumulator is solved, this might come into use both as a measure and as a store of immediately available value on condition that it could be kept unaltered and undiminished for any length of time. Such speculations. however, do not come within the purview of the present treatise, so we refrain from enlarging upon them further.
Sometimes there is so much gold available, that an ounce of gold as expressed in commodities, DEpreciates in value. We then say: prices of goods have risen. Sometimes, as is the case at present, February, 1933, there is so litde available that that same ounce of gold as expressed in commodities, APpreciates in value. We then say: prices of goods have fallen.
These remarks apply only, when the rise or fall of prices present themselves as a general phenomeon, in respect of a very large quantity of various commodities and over long periods of time. If only a few kinds of commodities are affected, the rise or fall of their gold prices are obviously due to under--production, over-production or under-consumption etc This has been the case with rubber of wich far more has been planted than proves to be needed for the time being. Therefore is has not been included in the table on p. 17.
When the output of gold, for a large number of years, declines or increases it affects prices of commodities, as the following table shows:



Movement in wholesale prices (according to the Sauerbeck-Statist Index) compared with:
A. Relative total supply of Gold (according to Prof. Cassell);
B. Relative supply of Monetary Gold (according to Mr. Kitchin) *)
') The above table and tezt are borrowed from the Report of the Gold Delegation of the Financial Committee Geneva 1932.



NOTE. The curve for Relative Total Supply of Gold show» the changes in the percentage ratio of the actual total stock accumulated frotn year to year (as calculated by the German Statistisches Reichsambt) to the „Normal Stock of Gold" calculated for each year by applying to the initial stock in 1850 the average annual rate of increase over the whole period 1850 to 1910. Similarly. the curve for Relative Supply of Monetary Gold shows the changes in the percentage ratio of the actual World Stock of Money in each year (as calculated by Mr. Kitchin) to the Stock of Gold Money as it would have been if it had increased at an even rate throughout the same period. (For further details sec First Interim Report of the Gold Delegation, Annexes X and XI, League of Nations, Geneva 1930).
In other words, the value of gold, as expressed in commodities, varies with its output and with the available monetary quantity (as distinct from non-monetary uses made of gold, which account for a large part of the annual output). Up to the present time, as the population and trade of the world have constantly risen, the world's stock of monetary gold should, according to expert opinion (pages 15 and 82 of the Interim Report) increase annually by 3,1%.
Whereas, however, the interchange of commodities as reflected in the total value of world-trade has risen from $ 16.509.000.000 in 1893 to $68.085.000.000 in 1929, or by 310%, the world's stock of monetary gold has only risen from £ 774.000.000 in 1893 to £ 2.336.000.000 in 1929 or by 200,8% as the following table shows:



The relationship between Wholesale Prices and the World's Stock of Monetary Gold.])
1 2 3 4 5
World'» stock Stock of Relative Wholesale Difference of
of Gold 1850 Stock prices of Col. 4 on
increased at (Ratio of r _ |
Money 3.1% Col. 1 to Commodities1) Col. 3
(end of year) per annum Col. 2) (1850=100) (°/0)
y In millions of Pounds
at 84/11V2 per fine oz.
1850 230 230 100 100 +0
1860 438 812 189 130 —7
1870 666 423 132 126 —5
1880 643 673 112 114 + 2
1890 720 778 98 94 +1
1895 827 906 91 81 — 11
1900 989 1,055 97 97 +8
1905 1,188 1,228 97 94 — 8
1910 1,446 1,480 101 106 +2
1916 1,728 1,666 104 138 + 33
1920 1,968 1,939 101 246 + 148
1925 2,129 2,259 94 176 + 87
1929 2.336 2.552 92 148 + 63
*) Jevons to 1850 and Sauerbeck-Statist since; paper prices in both reduced to gold prices.
On the other hand, if we apply Prof. Cassel's calculation of the increase of trade from 1850 to 1910 of 2, 8% p,a. and increase it to 3%, we shall find that the total trade of the world should have increased from $ 16.509.000.000 to $48.486.000.000 from 1893 to 1929. whereas it has actuaüy increased to $ 68.805.000.000.
The following table, borrowed from the Annual Report of the Director of the Mint (Washington) shows die output of gold and silver since 1492.
') Interim Report of the Gold Delegation of the Financial Committee of the Lague of Nations. Geneva, September 1932. (Abbreviated). Table B pages 82—84.



Production of gold and silver in the world since the discovery of America
[From 1493 to 1885 is from a table of averages for certain periods, compiled by Dr. Adolph Soetbeér; for the years since, the production
is the annual estimate of the Bureau of the Mint]
Percentage of
Gold Silver production
Annual average for period Total for period Annual average for period Total for period By weight By value
Period ° 
Coining value Q g O £•?
Fine ounces Value Fine ounces Value Fine ounces Coining value Fine ounces in Standard £- <P S. <
silver dollars " "
1493-1520 186 470 S3.855.000 5.221.160 $107.931.000 1.511.050 $1.954.000 42.309.400 $54.703.000 11 89 66.4 33.6
1521-1544 230194 4 759.000 5.524.656 114.205.000 2.899.930 3.745.000 69.589.320 89-986.000 7.4 62.6 55.9 44.1
1545-1560 273596 5!656.000 4.377.544 90.492.000 10.017.940 12.952.000 160.287.040 207.240.000 2.7 97.3 30.4 69.6
1561-1580 219906 4 546.000 4.398.120 90.917.000 9.628.925 12.450.000 192.578.500 248.990.000 2.2 97.8 26.7 73.3
1581-1600 237267 4 905.000 4.745.340 98.095.000 13.467.635 17.413.000 269.352.700 348.254.000 1.7 98.3 22 78
1601-1620 273918 5 662 000 5.478.360 113.248.000 13.596.235 17.579.000 271942.700 351.579.000 2 98 24.4 75.6
1621-1640 266845 5 516.000 5.336.900 110.324.000 12.645.240 16.361.000 253 084 800 327.221.000 2.1 97.9 25.2 74.8
1641-1660 281955 5.828.000 5.639.110 116.571.000 11.776.545 15.226.000 235.530.900 304.525.000 2.3 97.7 27.7 72.3
1661-1680 297709 6154.000 5.954.180 123.084.000 10.834.550 14.008.000 216.991.000 280.166.000 2.7 97.3 30.5 69.5
1681-1700 346095 7154.000 6.921.895 143 088.000 10.992.085 14.212.000 219 841.700 284.240.000 3.1 96.9 33.5 66.5
1701-1720 412'l63 8 520 000 8.243.260 170.403.000 11.432.540 14.781000 228.650.800 295.629.000 3.5 96.5 36.6 73.4
1721-1740 613422 12 681000 12.268.440 253.611.000 13.863.080 17.924 000 277.261.600 358.480.000 4.2 95.8 41.4 58.6
1741-1760 791211 16.356.000 15.824.230 327.116.000 17.140.612 22.162.000 342.812.235 443.232 000 4.4 95.6 42.5 57.5
1761-1780 665066 13.761.000 13.313.315 275.211.000 20.985.591 27.133.000 419.711.820 542.658000 3.1 96.9 33.7 66.3
1781-1800 571948 11.832.000 11.438.970 236.464.000 28.261.779 36.540.000 565.235.580 730.810.000 2 98 24.4 75.6
1801-1810 571563 11.815.000 5.715.627 118.152.000 28.746.922 37.168.000 287 469.225 371.677.000 1.9 98 1 24.1 75.9
1811-1820 367957 7.606.000 3.679.568 76.063.000 17.385.755 22.479.000 173.857.555 224.786 000 2.1 97.9 25.3 74.7
1821-1830 457044 9.448.000 4.570.444 94.479.000 14.807.004 19.144.000 148.070.040 191.444.000 3 97 33 67
1831-1840 652291 13.484.000 6.522.913 134.841.000 19.175.876 24.739.000 191.758.675 247.930000 3.3 96.7 35.2 64.8
1841-1850 1760502 36.393000 17.605.018 363.928.000 25 040.342 32.440.000 250.903.422 324.400.000 6.6 934 52.9 47.1
1851-1855 6410324 132.513.000 32.051.621 662.566.000 28.488.597 36.824.000 142.442.986 184.169.000 18.4 81.6 78.3 21.7
1856-1860 6'486262 134.083.000 32.431.312 670.415.000 29.095.428 37.618.000 145.477.142 188 092.000 18.2 81.8 781 21.9
1861-1865 5949582 122.988.000 29.747.913 614.944.000 35.401.972 45.772.000 177.009.962 228.861.000 14.4 85,6 72.9 27.1
1866-1870 6 270.086 1129.614.000 31.350.430 648.061.000J 43.051.583 55.633.000 215.257.914 278 313 000 12 7 87 3 70 30
}«7fi"lf^°M 577-883-000 63.317.014 81.864.000 316.585.069 409.322:000 ai 9L9 58.5 41.5
5/%Hl2 114-586-°°° 27.715.550 572.931.000 78.775.602 101.851.000 393.878.009 509.256.000 6.6 93.4 53 47
TaS'^n tln^n5 "-H6.000 23.937.773 495.582.000 92003.944 118.955 000 460.019.722 594.773.000 5 95 45.5 54.5
iqo?"^ ntn1'282 H2-895-000 27.306.411 564.474.000 108.911.431 140.815.000 544.557.155 704.074.000 4.8 95.2 44.5 55.5
J-^H-5^5 162.947.000 39.412.823 814.736.000 157.581.331 203.742.000 787.906.656 1.018.708.000 4.8 95.2 44 4 55.6
}q™'^ 12-447 939 257.301.000 62.234.698 1.286.505.400 165.693.304 214.229.700 828.465.522 1.071.148.400 7 93 54 6 45 4
1901-1905 15.606.730 322.619.000 78.033.650 1.613.099.100 167.995.408 217206.200 839.977.042 1 086.030.000 8 5 91.5 59 8 40 7
Ï25 19.471.080 402 503.000 165.053.497 213.403.800 10.5 89.5 65.3 34.2
]™ 19.977.260 412.966.600 184.206.984 238.166.600 9.8 90.2 63.4 36.6
21.422.244 442.837.000 203.131.404 262.634.500 9.5 90.5 62.8 37.2
|qV9 21.965.111 454.059.100 212.149.023 274.293.700 9.4 90 6 62.3 37.7
22.022.180 455.236.100 221.715.637 286.662.700 9 91 61.4 38.6
22.397.136 462.989.761 226.192.923 292.451.500 9 91 61.2 38.8
22.605.068 467.288.203 230.904.241 298.542.852 8.9 911 61 39
}ft8 460.051.329 210.013.423 271.532.506 9 5 90.5 62.5 37 2
21.301.836 440.348.027 172.263.596 222.724.649 11 89 66.4 33.6
toTc 22.73 <.520 470.026.251 173.000.507 223.677.423 11.6 88.4 67.7 32.3
t,}2 Bo^h9^ f5i^-136 180.801.919 233.764.096 10.8 89.2 66.1 33.9
i 20.345 528 420.579.351 186.125.017 240.646.486 9.8 90.2 63.6 36.4
£\l 18.6140.39 384.786.306 203.159.431 262.770.779 3.3 91.7 59.4 40.9
IJ/698-184 365.853.933 179.849.940 232.533,256 8.9 911 61.1 38.9
16.130.110 333.423.975 173 296.382 224.059:968 8 5 91.5 59.7 40.3
JIS ^fhlf 171.235.542 221.460.095 8,4 916 59.8 40.1
\lit o^-^-0^3 209.815.448 271.276.538 6.8 93.2 549 45.1
]4a TS3VJt 246.009 534 318.072.933 6.7 93.3 53.6 46.4
]92t 19.031.001 393.405.653 239.484.803 309 636.787 7.4 92.6 56 44
}%® 19-°2P42, 393-301.128 245.213.993 317.044.355 7.2 92.8 554 44.6
19.349.118 399.981.749 253.790.166 328.139.204 7.1 92.9 54.9 45.1
\£L Jn^H?n ^hGl8Jïl 253.981.085 328.379.585 7.1 92.9 55 45
]™ 19.700.049 407.236.156 257.925.154 333.478 987 7.1 92.9 55 45
il^iE ^i^l 260.970029 337.415.795 6.9 92.1 544 45.6
19dU 20.160 355 416.751.523 248.139.133 320.826.354 7 5 92.5 56.5 43.5
Total ■ • 1.061.340.987 21.940.679.253 14.976.992.838 ia364.192.748 ~ël ~93A 53U 46?
o-?«o^e w,orld-Production of the tw° precious metais during the years 1931 and 1932 was as follows (in Fine Ounces): Gold: 22.553.400 and 24.200.000 (est.). Silver: 193.000.000 (est.) and 160 000.000. (est.) This will bring the totals of the World-output for the 440 years up to respectively 1.108.094.000 and 15.329.992.838 fine ounces and shows a ratio of production of 1:13,83.



Whilst the stock of monetary gold, during the period 1893—1929, has not increased by 3%, the total trade of the world had increased by 4% annually.
This discrepancy besides the destruction of the value of silver (see Chapter IX) accounts for the rapid decline of prices which began in the autumn of 1929. World production since 1913, had increased by over 30%, the population of the world by only 13,8%, but in order to keep pace with the development of the commerce of the world the above 30% should have been about 48%. The two following tables have been extracted from the tables facing page 62 of the Interim Report, to which I would refer the reader for much more detailed and precise information. which could not be given here in extenso.
Consumption of the World's gold supply and World's stock of gold money. In millions of pounds at 84/1112 per fine ounce.
Proportion of current output consumed as additional figures under first 5 headings.
China Total Balance World's Year Industrial India and demand ava'kble gold Egypt as money output I j 
%| |% l°/o| */. '/.| Total Inacsree-
1890/4 63.1 84 4.0 8 » S 69.8 39 91.2 61 161.0 32
1895/9 65.1 26 23.6 9 8.4 3 97.1 38 155.7 62 252.8 67
1900/9 78.9 26 81.4 10 21.6 7 181.8 48 174.0 67 305.8 21
1905/9 94.9 22 50.2 12 17.3 6 162.4 38 268.3 62 430.7 41
1910/4 120.4 26 95.7 20 63 1 222.9 47 246.8 53 469.7 9
1916/19 91 21 50.5 12 148 3 166.8 36 274.4 69 430.2 -8
1920/4 87 24 103.6 29 -2.3 -1 188.3 52 170.7 48 359.0 -17
1925/9 75 18 90.9 1221 2.7 I 1 168.6 | 411 243.9 1 59 412.5 15
Totals ~664.4 124 j 449.9 1161 72.4 | 2 |l,186.7 [ 42 |l.625.0 | 68 |2.811.71
j 871 |86|l84 j 13j 18 | l| 523 1 50 1 514 l50!l.037 |
183W89 1 036 27 584 15 90 I 2 1710 4412-139 I 56 3-849



World stock of gold money and World population.
£ncj Stocks of per head of [ World's population
gold money Increase ... ... I 1 
of in millions of o/„ Worlds ...... Increase
ye^ poundsatpar[ " population | Milhons j 0/o
1894 802.4 12.8 181 d. 1.472 4.2
1899 958.1 19.4 151 d. 1.526 3.7
1904 1.133.1 18.2 171 d. 1.588 4.1
1909 1.400.4 23.7 202 d. 1.666 4.9
1914 1.647.2 17.6 226 d. 1.748 4.9
1919 1.921.6 1) 16.7 256 d. ■) 1.811 3.6
1924 2.092.3') 8.9 266 d. I) 1.890 4.4
1929 2.336.2») 11.9 282 d. t) 1.990 63
At the time of writing world prices have so much declined, as expressed in gold, that obviously gold has appreciated in value. The question used to be: How much gold must I give for a certain quantity of commodities? But, given the scramble for gold which set in af ter 1929, the question has become: How much goods must I give for a certain quantity of gold? The following table will answer that question. In order to obtain an ounce of fine gold the acquirer thereof had to deliver:
In 1925 In 1930 In Aagust 1932
660 lbs of wheat 1.496 lbs of wheat 2.170 lbs of wheat2)
10.423 .. ., coal 9.918 .. „ coal 14.530 „ „ coal 2.607 ,.
•» iron I 2.844 ., „ iron 4.592 „ „ iron
154 „ „ copper 211 „ „ copper 569 „ „ copper
86 „ „ tin 83 „ „ tin 95 „ „ tin
477 „ „ linseed 618 „ .. linseed 1.646 „ „ linseed
598 „ „ sugar 1.320 „ „ sugar 1.655 „ „ sugar
66 „ „ tea 83 „ „ tea 235 „„ tea
93 „ „ coffee 184 ., „ coffee 226 „ „ coffee
88 „ „ cotton 206 „ „ cotton 263 „ „ cotton
34 ., „ wool 63 „ „ wool 120 „ _ wool
12 barrels of ofl 18 barrels of oil 24 barrels of oil
') These figures are much higher than they would be if most of the gold coin had not been withdrawn from circulation after the post-war scramble for gold.
2) Respectively 11, 25 and 36 bushels.
2



I have arrived at these figures simply by taking the average price for each year, as expressed in dollars and/or Dutch guilders. These two currencies still represent gold, and the prices are world market prices. Since August, 1932, the prices of tin, copper, and cotton have somewhat risen, owing, chiefly, to a reduced output and to international agreements. Reduced production of commodities, however, does not enrich the world, but impoverishes it, and if these reduced productions of various commodities were to continue, it might well be said that the world is being crucified on a cross of gold, as Messrs. O. A. Falk & Co. suggested in one of their circulars. The abandonment by Great Britain of gold as a measure of value, they observe in their circular of April 4th, 1932 „will restore freedom of action to those who control the world's credit and price policies".
') The above was written in the autum of 1932. In January 1933 however, the Westminster Bank, in its monthly Report, points out that England's abandonment of gold has not made her independent from the trend of world prices as expressed in gold. In July, 1932, the continuous fall of the latter prices was temporarily interrupted, but so was that of sterling prices. The renewed decline of gold prices which began in the autumn of 1932, was reflected in sterling prices, as the table shows. The decline of sterling prices was less accentuated, and would have been greater if Sterling exhange had not fallen. The Report is of the opinion that if gold prices were to decline further, either Sterling exchange or Sterling prices would decline in sympathy, concluding that England needs not isolated action, but international co-operation.
Wholesale Index Numbers since September 18, 1931
1931 U. S. England
September 18 ... 100 100
October .... 993 108,4
November .... 98,8 109.1
December .... 98,6 108,3
1932
January .... 98,5 108.3
February .... 92,4 1103
March 91,5 108.1
April . . . . . 89,6 103,8



This very considerable appreciation of gold as expressed in commodities, being a world-wide phenomenon, shows conclusively that gold is not a satisfactory measure of value. Even when eked out by various deviCes, such as cheques, postal giro accounts, banknotes, credit etc. its maldistribution since the crisis broke out (which maldistribution be it remarked, is not a cause, but an effect of the crisis of production) proves that it is not satisfactory as a universal store of value either, the available quantity being inadequate. For as soon as prices show an allround declining tendency, gold follows its old habit of looking for security. That, as will be more fully explained later, is the main reason for the accumulation of gold in the United States, France, Belgium, Holland and Switzerland.
Still, if there were nothing else to help out gold, there would be no help for it, and the world would either be impoverished or look out for something else. The scarcity of gold and hence the inconstancy of its value has the same effect upon our way of measuring values as if we were to measure cloth with a yardstick made of a spiral or of a rubber thread, which could be lengthened at will. If that were our measure of length, the seller of cloth would at once discard it and reach out for a more reliable one, lest his buyers were to ruin him.
Comparatively recent History affords an example which has been repeated in our time. During the Napoleonic Wars prices rose owing to the issue of paper money, declining again when this was withdrawn, just as during the World War and af ter. The boom of 1920— 1921 coincided to a
May 87.3 100,2
June 86,4 97,4
Jury 88,8 99,5
August 89,8 102,5
September .... 89.6 104,6
October .... 87,3 102.6
November .... 82.7 103,1
December .... 83.5 101,2



very remarkable extent with thé return to what amounted to Bimetallism in India, to which further reference will be made in the Chapters on Silver and Bimetallism. The boom turned into a collapse with the demonetization of silver in Europe. This collapse was mitigated again between 1922 and 1924 and again turned into a boom owing to the goldinflationary period which was inaugurated at Genoa in 1922 by the Gold Exchange Standard in Europe and shortly afterwards by the Gold Bullion Exchange Standard in India.
The situation between 1820 and 1848, which years include the „hungry 'forties" differs vasdy from the present plight of the world in that there is no scarcity of food or of any raw materials or manufactured articles, but an unprecedented abundance x) owing to scientific inventions and to machines doing a larger share of the work than ever before. This enables the world to keep some 30 or 40.000.000 unemployed and their families alive, and the question arises if in the long run a working week of 4 or 5 days of 6 working hours should not be introduced.
The difficulties of the period from 1820—1848 may however be compared with our present difficulties in that there was a scarcity of gold. If this had continued, England might already at that time have dropped gold, but the enormously increased output of the yellow metal saved the situation. Between 1840 and 1850 as the Table shows the output of gold nearly trebled, and between 1851 and 1870 the annual average output was ten times as large as in the 'forties. The result was a rise of prices and wages by some 50% and a great expansion of trade. But the adoption of the Gold Standard by Germany after her victorious war against France unfortunately coincided with the declining gold output and the abandonment of Bimeltallism by the Latin Union. The result was a very prolonged trade depression,
') Comparatlvely speaking. tor as long as hundreds of millions of persons all over the world, and especially in India and China, are practically destitute, abundance only applies to some countries of the West.



which I remember perfectly well and which lasted up to about 1890. Then came the unheard-of increase of the South African gold production, rising prices and prosperity. Germany s industries expanded enormously, to some considerable extent simultaneously with the expansion of the British Empire and of the Dutch Colonial Empire in the East, in both of which the principles of Cobden and Bright regarding Free Trade prevailed, from which Germany, which had adopted Protection herself, profited enormously.
Germany's sales of manufactured goods expanded so much in the British Empire, that England, although still devoted to abstract Free Trade, endeavoured to stem the inrush of German goods by the Merchandise Marks Act, in the belief that all German goods were cheap and bad and that the words „Made in Germany" would cause prospective buyers to refuse the goods. As Germany however produced many atricles of very good quality, the words „Made in Germany" became an advertisement and caused a further expansion of German trade. Germany became very wealthy, and probably this was even one of the causes of the Great War.
„It may be doubted", says Mr. Joseph Kitchin in the Report ') whether the increase is applicable to post-war conditions (and in any case the percentages seem to have fallen somewhat in the course of the pre-War period), but, applying it, we should get the following:
2) Interim Report, p. 81.



End of 1913 £
End of 1929 £
Stock of gold money according to Mr. Kitchin
1.579.000.000
2.336.000.000
Requiring at 3.1 percent, an annual increase in money of
49.000.000
72.400.000
Addition to money (5 years' average)
56.300.000 7.300.000
52.000.000 20.400.000
Difference
Gold in Central Banks and Treasuries
975.000.000
2.150.000.000
A requirement of 3.1 percent per annum on the stock of gold money equals on gold in Central Banks and Treasuries
5%
3.4»/,
These figures show an abundance of gold for monetary purposes about 1913 and a shortage (as regards new gold) about 1928".
In the same Report 1) Prof. Cassel says: „A gold production which is sufficiënt at a certain time must always, if it is assumed to remain constant, become entirely inadequate after some decades to cover the need of 3 percent of the accumulated stock of gold. This result, which may be called the paradox of the gold Standard, shows the fundamental difficulty connected with the use of gold as a Standard of value." This authority then goes on to say that if there is to be a gradual exhaustion of the South African mines and no new discovery to make up for this loss, we may come down easily to less than half of what is required for the stability of the price level, and the consequences would be serious. A reduction of the monetary demand appears very important. This was written shortly before the crisis.
') Interim Report 1930, p. 76,
■



CHAPTER H.
THE POST-WAR CAMOUFLAGE OF THE SCARCITY OF GOLD
The world's gold supply indeed used to be made to look much larger than it really was. Under the „Gold Exchange" system and the „Gold Bullion" system, which systems served as a camouflage of the scarcity of gold, prices rose and rose and it is rightly held by many experts that before the crash came, the world's commerce grew by gold-inflation. The available quantity of gold had to serve as a basis of an inverted pyramid (World economie Survey page 199), the apex of which consists of Central Bank gold reserves, upon which are built successive layers of Central Bank credit, commercial bank credit and, finally „book credit". After the War the gold basis had been enlarged because the Central Banks were then no longer under the obligation to cash their notes in gold. Thus the world had actually given up the main feature of a real gold Standard before the crash came. The gold basis, however, besides by the gold coin which had returned to the vaults of the Central Banks, not to be brought into circulation again, had been enlarged by another, much more dangerous device, under what is known as the „Gold Exchange" Standard, already alluded to. (Report of the Gold Delegation 1932 pat. 123). Under that system, the Report says, „the Central Banks were legally entitled to keep a part, or the whole of their reserves, not in gold, but in liquid assets abroad. The Central Banks in other countries were also accustomed to maintain considerable foreign assets, which in practice they employed to meet demands made on them for foreign currency. To what figure



the aggregate of such floating foreign balances of Central Banks amounted, we do not know, as in many cases they were not published and in fuil. The published figures alone, which must have been substantially short of the real total, amount to almost $3.000.000.000 at the end of 1930."
Although the Report does not believe that-his upper limit for the possible additional demand that may „ultimately arise from the distrust of foreign currency assets as a substitute for gold" (por. 123) will be reached, still the risk of exchange depreciation in the country where the assets were invested „has proved a real one and there has, as a result, been a rapid conversion of available assets into gold" (par 124).
The Report is of the opinion (par. 124). that unless, when the gold Standard is once more put into general and ef fective operation, some measures are adopted to lessen this risk or to devise a new system in place of the post-war goldexchange Standard, the additional demands for gold, arising from the partial abandonment of the practice of maintaining reserves in foreign currencies may counterbalance the recent abnormal augmentatiön in the avaiable stocks of monetary gold.
The Delegation, as a remedy for the scarcity of gold, which for a time appeared to threaten the world merely from a declining output (which indeed may occur again), recommends a considerable reduction of the legal gold reserves to be held by the Central Banks to counterbalance a possible declining output and also the breakdown of thé goldexchange system 1). In some quarters it is suggested to reduce the percentage of legal gold reserves against notes issued and other immediate liabilities to 20% and even less. The present percentages in France and the United States are from 35 to 40%. Such diminution however, would amount merely to shirking the difficulty, for the apex of the inverted
I) This is also recommented by the Commission for the preparing of the agenda of the 1933 Economie World Conference (Vide Chapter K).



pyramid of the credit would thereby become smaller, the inverted base however might be extended.
The gold-monometallists remind one of the Irishman, whose blanket was too short. He cut off a piece from the foot-end and placed it on the head-end of his bed and was amazed when his feet grew cold.
The Gold Delegation indeed anticipates (par. 118) that the volume of the sight liabilities of the Central Banks will adjust itself downward if prices remain low, ,,in which case there would be less demand for gold, which might for some period postpone the time when a shortage in available supplies of gold would need to be feared."
Therefore, either the world must forego the much-desired rise of prices (Macmiüan Report page 118), which, on all hands, is proclaimed to be a crying need of the time, or face a scarcity of gold, if and when the gold Standard is internationaüy restored. In other words: now that prices have fallen to about half their 1928 value, there is gold enough. But as soon as prices rise again and prosperity returns, it will be the same story over again.
If rising prices were an unmitigated evil, whereas, within certain Hmits, they need not be, the world might be said to be between the devïl of gold-scarcity and the deep sea of rising prices. From a careful study of the Report, which has been published in three parts by the world's recognized goldexperts, it is imposible to arrivé at any other conclusion.
The fact that gold accumulates in some countries, (in so far at all events as it has not been sent there for safe keeping, as is the case with a very large part of it, whereas other countries are more or less denuded of it), denotes a very natural event in an unequal world, viz. the enrichment of some countries and the impoverishment of others. In a world bristling with inequalities of race, climate, soil, geographical situation, genius and luck. one country is sure to be enriched and another to be impoverished. If this be true, there hardly seems to be much occasion for indignation



at some countries having accumulated more gold than others, or for telling them that „they must play the game" as if world economy were a game of bridge instead of a grim struggle for existence. As soon as those countries have too much gold and sufficiënt confidence they will lend it out, rather than leave it in their vaults without interest. As within a community a wealthy member of that community may act as a depository and guardian of wealth, which others might have dissipated, so within the community of nations (or what remains of it) wealthy nations may act as such guardians. Gold, and for that matter, money derived from it, and credit too, is of little use unless the owner hands it ooer to somebody else either (1) by way of a loan on interest, (2) to pay a debt, or (3) to purchase goods or services.
A very clear case of profligacy in a nation is the case of Russia. That country, already long before the war, had squandered its wealth, and that of the countries (chiefly France, Holland and Belgium) who were foolish enough to lend her their savings, on imperialistic adventures first and in our time on rash and fatuous social experiments. The result is that she has lost her gold, her population is starving, her currency is being inflated again and she has to pay from 21 to 31% for credit (Times 27 September 1932). That unfortunate country also presents a very clear case of racial inequality, for whilst the resources of Russia in Europe and Asia are possibly as great as those of the United States and Canada, she is the poorest country in the world and her population is subject to recurring famines and mental derangement. The Russian Statebank too has given up gold payments and shipments.
How did the scarcity of gold and its maldistribution arise?



CHAPTER ffl
THE „MALDISTRIBUTION" OF GOLD AND THE CURRENT FALLACIES AS TO ITS PRIMARY CAUSES
In England the concensus of opinion is, that the maldistribution of gold arose in the first instance from the payment of War-Debts, which is „the basic cause of the extraordinary inflow of gold into France and the United States" (Prof. Cassel,. The .crisis in the World's Monetary system). The Times of August 27the., 1932, attributes the breakdown of the world's monetary system to two main causes: the „strangling of world-trade by excessive tariffs and the dislocation of international exchanges by the transfer of huge sums from one currency to another in payment of War-Debts and Reparations."
77ie Report of the Gold Dele gation (Geneva June, 1932, page 66) says, inter alia: „In the first period (January, 1925 to December ,1928), one of stability and orderly progress (the italies are mine), the United States as already indicated lent abroad, mainly to Germany, sums more than sufficiënt to make gold movements in settlement of Reparation and War Debt payments unnecessary, while France accumulated large short-term balances abroad. In the second period (January lst., to June 30th, 1931), one of profound disturbance on the other hand, France and the United States together not only collected the whole of Reparations and War Debts in gold but also converted balances accumulated abroad during the earlier period into gold and withdrew them... It may be said with truth that Reparation and War Debts payments collected from January 1925 till 1931 (amounting to



about 2.262 million dollars) have. over the whole period, been
received in gold To put the matter very briefly, we
hold that the fall in the general level of prices has been the fundamental cause of the present depression, and that that fall was the result of the obligation to pay Reparation and War Debts, combined with the u n wil 1 in g n e s s of the receiving countries to accept payment in goods and services sothat payment had to be made in gold". (The spacing is mine). In the House of Commons Mr. Chamberlain declared, on April 22nd, 1932: „It is accepted almost without dispute that the prime cause of all our troubles was the attempt to pay huge sterile War Debts and Reparations across frontiers that would not receive goods, the payments thus having to be made in gold." Mr. Churchill said, on May lOth, 1932, „It was not until the United States, after the crash of October, 1929. ceased to. re-lend to Europe that they saw the monstrous spectacle of gold being used, not as a balancing force, or a measure of human effort, but being used actually to pay off those enormous War Debts and Reparations across tariff frontiers which would not receive goods." If a rich man refuses to extend credit to a spendthrift debtor, or a banker to a shaky dient, is this to be called monstrous?
As the assertion re the War Debts is generally believed, and parrotted all over the world I propose to show its fallacy by incontovertible statistical evidence. The mere fact that the Delegation, whose work in other respects deserves the highest praise, has failed to produce such evidence made me doubt the statement, and ca used me to send for the official American returns. These are to be found in the Statistical Abstract o[ the United States, (the 1931 and 1932 issues).



As the entire argumentation of the Delegation is based upon this fallacy, their assertion is all the more serious.
The total amount due to the United States by the exbelligerents as the following table shows, amounts to some $11.000.000.000.
War Debts and Payments
Indebtedness of the following j Payments') by the countries na-
countries to the United States on II med in the other column to the
December 31* 1930. U.S. in respect of principal and
interest. 1929 1930
United Kingdom $ 4.398.000.000 $ 160.590.000 $ 160.780.000
France .... 3.865.000.000 ., 32.435.000 „ 54.325.000
Italy 2.017.000.000 .. 5.000.000 .. 6.261.000
Belgium ...» 404.730.000 „ 5.575.000 „ 6.450.000
Russia . . . „ 308.601.000 nihil nihil
Poland . . . „ 206.057.000 „ 3.000.000 „ 7.507.000
Czecho-Slovakia ., 168.571.000 „ 3.000.000 „ 3.000.000
Austria .... 24.040.000 nihil .. 288.000
Totals $ 11.391.999.000 $ 209.600.000 $ 238.611.000
The smaller amounts due by the Russian border States, Rumania, Greece and Hungary have been left out, because these countries are not mentioned in the returns of imports of commodities and the amount is small as compared with the total.
The total is certainly a gigantic sum but the U. S. have made the terms as easy as they could. in view of the fact that the Government of the United States, during and shortly after the war were obliged to borrow all the money which they had advanced, and were still advancing to the ex-belligerents. The total Public Debt of the United States, outstanding on December 31st, 1930, as per Table No. 208 in the Abstract amounted to $ 16.185.308.000. As per the same Table the Public Debt outstanding on January lst., 1917, the year when the U. S. came into the war, amounted to $ 1.225.146.000 and on December 31st, 1925 to
1) Whilst in 1931 all imports declined in value, the War Debt payments were reduced to about one half their previous average.



$20,516,272,000. The redemptions, from 1926 to 1930, totalled $ 29.297.058.000 and the new issues during the same period to $ 23.966.093.000, the net redemption thus amouting to $4.330.965.000. Thus the debts due by the ex-belligerents, which have become known as the Wat Debts, being debts from Government to Government and not issued to the public, form a very large percentage of the total, viz. about 70%. Even to an enormously wealthy country like the United States, therefore, the finandal consequences of the war were no small matter, and whilst the wave of prosperity from 1925-1929 enabled them to redeem a large part of the Public Debt, the world crisis affected them to such an extent that President Hoover, in a speech on October 5th, 1932, revealed the fact that early in 1932 the country was very near to being obliged to give up the gold Standard, and as this Chapter is being set in type (March 6th., 1933) telegrams from Washington show that this possibility has come alarmingly near er to being realized.
Now the cry is to the effect that the United States have refused to accept goods and services against the service of the Diplomatic or War Debts, but insisted upon payment in gold. A similar accusation in made against France. As the United States are creditors to all the ex-belhgerents (the British Dominions. Japan and Germany excepted), including France, it is expediënt to examine the American Statistics in detail. The following table shows that in regard to commodities imported into the U. S. during the last two years that preceeded the crisis (during 1930 the crisis was developing, to gain in intensity in 1931 and 1932) the statement is not confirmed by statistical evidence. To say that the U. S. exported far more goods to the War Debt countries and other ex-belligerents than they imported from them is quite true but not to the point. They did not buy American goods pour les beaux yeux de VAmérique, but for profit. Several of them, too, were creditor states themselves.



Imports of merchandise into the United States from the War Debt countries. Precious metais excluded. In 1000 dollars.
1929 Great Britain . France . . . Italy .... Belgium . . . Russia . . . Poland . . . Czecho Slovakia Austria . . .
Totals 1930 Great Britain . France . . Italy .... Belgium . Russia . . , Poland . . . Czecho Slovakia Austria . . .
Totals 1931 Great Britain . France . . . Italy .... Belgium . Russia . . . Poland . . . Czecho Slovakia Austria . . .
Totals
^UtT* Crude materials Foodstuffs ^'T^' manu-
or wnicn tured goods factured goods
Free | Dutiable Free Dutiable Free Dutiable Free Dutiable Free Dutiable
157.936 171.814 43.851 22.920 II 10.906 8.57511 48.257 84.277 54.926 106.042
^54.410 119.075 17.187 8.522 476 12.598 6.500 26.390 28.247 76.569
,26.136 90.931 18.887 6.022 1.262 45.967 3.694 6.525 7.292 32.417
-23.908 50.189 12.444 4.102 3 1.139 9.833 21.081 1.627 23.817
11.476 10.044 6.483 6.656 2.823 1.484 1.482 1.132 688 772
2.581 2.271 2.069 627 2 857 895 148 115 1.139
13.569 32.560 354 493 1 291 1.482 8.272 11.782 28.504
4 368 8.868 1.149 66 1 272 1.178 1.213 2.044 6.817
294.384 [ 484.702 97.424 44.407 15.474 70.678 72.766 94.088 106.721 275.577
106.102 103.832 38.025 9.641 10.081 8.446 22.438 18.583 85.622 67.168
87.817 75.976 9.006 2.466 801 9.349 j 8.848 11.177 24.663 52.965
23.270 66.052 14.539 4.974 820 29.691 2.967 8.612 4.944 17.774
20.182 81.404 9.897 1.169 8 836 9.276 14.796 967 14.604
12.830 9.122 8.174 8.005 8.678 1.949 936 8.441 252 727
1.285 1.553 774 341 129 468 220 116 162 632
7.624 22.000 408 180 - 821 1.087 2.160 6.029 19.400
2.814 4.966 829 15 1 174 699 988 1.285 3.790
211.8441304.904 81.652 21.791 14.918 51.229 41.466 64.862 78.914 177.065
69.339 66.118 29.083 4.819 10.262 6.413 8.366 10.682 21.639 44.249
23.267 66.907 6.684 2.346 575 6.468 2.086 5.743 14.921 41.851
15.725 46.934 10.044 6.042 785 22.170 1.920 1.569 2.977 17.168
10.787 23.504 4.980 821 - 501 4.682 10.903 1.175 11.779
6.830 5.781 5.683 1.942 620 1.646 292 1.598 284 699
866 1.088 589 335 - 265 109 165 168 334
785 22.377 155 241 2 808 611 2.222 117 19.610
757 8.350 175 103 1 177 171 516 410 2.553
128.306 225.054 56.393 16.149 12.235 37.843 18.037 83.323 41.641 139.788



During the years 1929—1931. moreover. the United States imported from the following ex-belligerent, but nonWar-Debt countries. merchandise at a total value of § 2.527.785.000, of which free $1.676.036.000 and dutiable $851.749.000: Germany. British India, Br. Malaya» Ceylon Australia, New Zealand, Br. Africa, Br. West Indies, and Algeria and Tunisia.
As may be seen from the table, whereas during the years 1929 and. 1930 the debtor countries, in respect of the War Debts, had paid about $449.600.000. their free imports during these two years into the U. S. totalled $ 500.228.000 and their dutiable imports $ 789.606.000. They therefore paid for the service of Debts in commodities, more than three times over, and some $ 61.000.000 worth came in Free extra.
It is. therefore, a riddle to any man in his senses how the experts arrivé at their conclusion to the effect that the United States refused payment in commodities.
The following three tables show the total payments ef fected by the War Debt countries during the 10 years ending December 31, 1930. their total imports into the U. S. during the same period. and the total imports into the U. S. during the same period by the other ex-belligerent, but non-War Debt countries.
Payments against the War Debst (Principal and Interest)
from the beginning up to December, 31st-, 1930, by the following War Debt countries. In 1000 dollars *)•
Great Britain. . - ■ 1.845.828
France 465.402
Italy 84.224
Belgium 46.516
Russia 8.749 {seized by U. S.)
Poland 19.555
Czecho Slovakia . . . 16.804
Austria lF- 875
2.487.652
i) Statistical Abstract U. S. 1931. Table No. 210.



•) Statistica! Abstract U. S. 1931, Table No. 339.
3
1921—1925 Total 1Q9fi 1Q07 1Q9S ,09q 10Sn Grand Total
Average 1921-1925 1J2b 1927 1928 1929 1930 1921-1980
Great Britain . . 855.781 1.178.905 883.198 857.981 848.510 329.755 209.994 8.408.323
France .... 147.875 789.875 152.020 167.800 168.748 171.485 118.776 1.603.203
Ittdy 79.141 896.706 102.662 108970 101.681 117.067 79.821 905.270
Belgium .... 58.835 291.676 77.798 72.284 75.074 74.048 51.686 642.360
Russia 4.567 22.785 18.503 12.139 18.949 21.520 21.968 105,859
Poland .... 2.869 11.845 4.147 4.825 8.604 4.853 2.838 80.012
Czecho Slovakia . 17.878 86.866 28.302 81.726 86.788 46.129 29.584 259.889
Austria .... 4.087 20.486 9.419 10.611 12.121 12.235 7.780 72.651
Total 10 years . . . . Deduct Russia. .
Payments at per preccding table Excess of goods . . ,
6.927.067 105.859 6.821.208 2.487.652
4.883.556
Total Imports of Merchandisc into the United States from War Debt countries (precious metais eycluded), from 1921—1930. In 1000 dollars *).



It may be pointed out that American exports of merchandise to all the countries named in the above tables far exceeded the imports. It appears in fact from the Statistical Abstract that American exports from 1921—1930 exceeded these imports by about $ 10.500.000.000. But this excess was paid for in the shape of money loaned by the
Total Imports of Merchandise into the U. S. from the other ex-belligerent, but non-War Debt countries. Precious metais excluded. From 1921—1930.
In 1000 dollars.
4>-
1921-1925 Total 1926 1927 192g 1929 1930 Total
Average nve years
Germany .... 182.496 662.480 198.495 200.554 222.18Ó 254.688 176.981 1.715.828
Canada .... 898.771 1.968.855 475.881 475.028 489.803 503.496 402.850 4.314.913
Br. India .... 109.020 645.100 160.930 181.008 148.932 149.832 104.148 1.229.445
Br. Malaya . . . 152.247 761.285 383.800 277.784 204.364 239.164 144.032 2.010379
Ceylon .... 27.059 185.295 55.805 40.846 30.737 82.487 20.707 815327
Australia .... 87.534 187.670 45.788 88.627 81.577 81.968 17.451 353.031
New Zeeland . . 18.821 69.105 18326 12.671 19.208 20.834 11.621 152.265
Br. Africa . . . 22.185 110.670 89.621 82.687 81.288 39.638 27.256 281.164
Br. W. Indies . . 15376 22.418 22.418 22.649 21.823 22.022 18.890 127.710
Algeria and Tunisia 2.096 10.480 8164 4.650 4.938 4.882 4.019 31.623
Total 10.631.685
1921—1990 10 years War Debt countries . . . 6.821.208
Grand Total 17.852.893
do do Payments against War Debts 2.487.652
Excess of imports into U. S. over Service of War Debts 14.865.241



U. S. and by services, as is proved by the Balance of Payments of the United States. The American trade balance is always active, but not the balance of payments. In fact in April, 1932, as President Hoover has divulged in October 1932, the U. S. owing to their passive balance of payments. had nearly to go off gold. (see p. 30).
As the Economie Survey righdy says (p. 205) „in the general fear of a scramble for gold at the beginning of the reconstruction period. provision was made in the statutes of many central banks. whereby the obligation to convert their notes into gold coin was changed into an obligation to convert them into gold bullion, foreign gold exchange, or
either at their option the avowed object was to effect an
economy in the use of gold. The creation, on a much wider scale than ever before, of this mechanism — the gold exchange Standard gave rise toa growing body of criticism in the later stages of the boom period. In so far as the central banks which were liable to be drained of gold by a realisation of the foreign exchange reserves of other countries took precautions not to allow their domestic credit issues to expand to the full extent made possible by their gold holdings, the danger of a doublé credit expansion upon the same gold stocks was avoided. The net effect of the gold exchange practices, however, was quite clearly to assist the credit expansion of 1925 to 1929, and indeed the system was created largely in order to economise gold." (The spacing is mine).
During the war-years and from 1920—1924, as the accompanying table shows, the United States had indeed accumulated vast reserves of gold. As I have shown, this cannot possibly have been due to their refusal to accept goods and services from the War Debt countries.
The accumulations were due largely to flight of capital after the collapse of the early 'twenties.
As the table shows, there was an excess of exports of gold



in the United States over imports during the years 1925— 1930 of $67.200.283. Therefore. duringthe six years which preceded the crisis which made itself seriously feit only in 1931 the United States did not denude the world of gold.
Moreover *) the War Debt countries. which are said to have sent gold to the United States as the latter refused goods and services, still increased their gold stocks from 1925 to the end of 1930 as follows:
France $ 1.031.000.000
Belgium 138.000.000
Italy 58.000.000
Czecho Slovakia 19.000.000
Poland 37.000.000
only Great Britain having lost $22.000.000 on balance. During the same period Germany increased her gold stock from $316.000.000 to $ 552.000.000.
Although the gold movements in 1931 cannot be regarded otherwise than as e f f e c t s of the growing crisis, we may mention that during that year Great Britain and the United States lost respectively $600.000.000 and $200.000.000 whereas France gained a total of $ 580.000.000 and the rest went to ex-neutrals, from no other motive than flight of capital.
The „Maldistribution of gold" has obviously very httle to do with the payment of War Debts. but is chiefly due to hoarding (this alone is estimated at $400.000.000) and flight of capital from lack of confidence.
If there are only 4 bottles of wine for a dinner party of 12 guests. of which three of four may take a botde each. evidently the others have to be content with a glass each. which they may have to dilute with water (gold exchange Standard etc.) to quench their thirst. Plainly the remedy is: either to supply more wine. and if this be impossible, as is
i) Report of the Gold Delegation 1932, p. 78 et seq.



Estimate of future monetary demand for gold if no economy in its use is made.1)
(In millions of dollars.)
. u Excess or deficit of amount of new
Avail- Increments to gold reserves monetary gold aviable compared
Est!" Non- dAe required to provide with increment required to provide.
mated tor 
Year o ld rnone-
produc» 'ary «I* *arv" 33 °/0 cover for 40 °/o cover for 33 % cover if 40 °/o cover if
tion mand. 2) nur- average increases average increases notes and sight notes and sight
J~"p in notes and sight in notes and sight Iiabillties HfHUHff
' Iiabillties of: llabilitlesof: increase at: increase at:
2 0/8 3 0/o 2 0/o 3 0/o 2 0/o 30/0 20/0 3 0/o
p. a. p. a. p. a. p. a. p. a. p. a. p. a. p. a.
1980 404 180 324 167 268 200 803 + 57 — 39 + 24 — 79
1981 403 183 230 170 260 204 818 + 50 — 40 + 16 — 98 1932 410 184 226 174 369 209 823 + 52 — 48 + 17 — 97 1938 407 186 221 178 276 218 332 + 48 — 66 + 8 —111 1984 408 188 215 180 285 217 841 + 86 - 70 — 3 —136 1986 898 190 208 184 294 231 862 + 24 — 86 —18 —144
1986 897 192 206 188 302 226 868 + 17 — 97 - 21 —168
1987 892 194 198 192 311 280 878 + 6 —113 — 82 —175
1938 884 196 188 196 821 235 385 — 8 —188 —47 —197
1939 870 198 172 200 830 240 896 — 28 —157 — 68 — 224
1940 | 370 200 | 170 204 340 244 408 — 84 —170 — 74 — 238
8"
n n
a n
O pi
C 09 CQ n
CQ
o_
CL
5*
O-
&
O 3
5'
CQ
—
r> O
i
o' tr
I
n
') Interim Report p. 16.
2) On the assumption that the non-monetary demand for gold increases at the rate of 1 per cent per annum.
UI ^1



CHAPTER IV
THE AMERICAN TARIFF BARRIER. HAS AMERICA REFUSED TO ACCEPT GOODS IN PAYMENT OF WAR DEBTS?
In the League of Nations Economie Sucvey 1931 — 1932, on pages 65—66, the author, af ter mentioning the Smoot-Hawley Tariff of the U. S. as „the great tariff event of 1930", which it certainly was, says that the European debtor countries, in default of new loans being available, must seek to mobilise dollar rescources by exporting to other markets which in turn receive payment from the United States for their exports. „The transaction", he says, „at its simplest, must be three-cornered, the European debtor country exporting manufactures to a raw material producing country, which in turn can export to the United States. But in 1929 and 1930 these raw-material countries were in serious difficulties, the supply of new capital feil off during 1929 and, when the United States further restricted the possibility of direct payment of debt obligations, it was not possible to increase exports of manufactured goods to neutral markets." With these markets none other than chiefly ex-belligerent markets as per the above tables can be alluded to.
The argument chiefly applies to the years 1929 and 1930, during which the principal raw-material producing countries of the world as shown in the American tables, exported for $ 1.930.833.000 worth of merchandise to the United States, of which no less than for the value of $ 1.259.494.000 came in free.
The Smoot-Hawley tariff, which the author mentions, did



not become operative until af ter June, 1930. and was an effect of the depression. Not a cause of it. All the other tariff restrictions all over the world came into force during and af ter 1931, when the slump was in full swing. It is of the utmost importance to stress this point, when we are endeavouring to find the causes which brought the slump about. The decline of prices began in the latter end of 1929 and continued throughout 1930, 1931 and up to about August 1932, when it came to a stop, (except as regards wheat, which in the autumn of 1932 declined to unheard-of levels), chiefly because production had diminished and stocks held by frightened dealers and manufacturers had shrunk.
Nor did the United States decline to take manufactured goods from the War Debt countries. As the table on p. 30 shows, they let in Finished Manufactured Goods free of duty for a total of $ 180.635.000, the value of the Semi-Manufactured Goods imported during 1929 and 1930 having totalled $114.232.000. Thus they imported. free of duty, into the United States,Finished and Semi-Manufactured goods for a total of $294.867.000, so they paid no less than 66% of the $ 448.000.000 „wartribute", as it has been called, in manufactured goods free of duty. during those two years which preceeded the crisis.
The enormous exports of the War Debt countries into the United States of manufactured articles must have left them a very good profit, for a large part of the Finished manufactured articles were of course articles of luxury, and this applies particulary to the d u t ia b 1 e Finished Manufactured articles, which otherwise would not have crossed the Customhouse barrier. Especially France should be mentioned here, for as is well known, her manufactured articles, which include the famous articles de Paris, are to a very large extent articles of fashion and objets d'art, which are much appreciated in the United States, as they are everywhere. The total of free and dutiable



finished articles was $ 633.000.000 and if we assume the profit thereon to have been at least 33%. or about $216.500.000. we find that about half the service of the diplomatic debts was paid in the way of such profits. If we assume the profits on the remainder of all other imported articles, totalling § 662.567.000 to have been some 10 or 12%, we find that about 70% of the War Debts was paid for in profits. Further-: the total cost of all the imports of $ 1.295.834.000 consisted naturally to a very large extent of w a g e s. apart from profits. It is of course impossible to make a calculation with any pretence to exactness, still it seems hardly a bold assumption when we assume that the $ 448.000.000 of „war tribute" were much more than paid for by wages and profits on imports into the United States. Nor does it appear a rash assumption when we take into consideration that according to another official American publication: The balance of international payments of the United States in 1931 (Table No. 16). the United States resold to foreigners stocks and bonds totalling $ 659.000.000.
It would carry us too far, were we to analyse the years 1921—1928. bot it appears very probable that these show much the same features as 1929 and 1930. and that from the inception of payments these were much more than made good by imports of goods into the United States, as shown in the table on page 31 et seq.
The United States Trade Balance is nearly always an active balance as that country exports for a larger value than it imports. This is generally attributed to the tariff by debtor countries, but with the exception of Great Britain. most of them have always followed a protectionist pohcy. so they have not given a good example. and they themselves tried to exdude American manufactured goods. Moreover. nobody forced them or any other. non-debtor, country to take American goods. The reader may see for himself to
") Table Na 16.



what ex tent the debtor countries and the rest of the world carried on commercial transactions with the U. S. for a number of years, in examining the photographic reproductions of several tables taken from the United States Statistical Abstract 1931 and 1932 and which are printed on pages 42, 43, 49. 50 and 51. These reproductions were made in order to convice the reader of the veradty of my statements and to avoid any possible error.



Ho. 495.—IMPORTS, FREE AND DUTIABLE. BY
Norm.—Dutiable imports for consumption from China are less and the free imports correspondingly greater free under special provision. See Table 486. The reelassification of carpet wool from dutiable to free
(Valuea in
Total imports Crude material* Foodstuffs
Value Per cent Value Per cent Value
Country 
Free I Free »g* Free ^ Free ™£ Free ™
Grand total. 1,381,435 709,199 66.1 33.9 524,541 117,632 25.1 5.6 333,232 193,910
Borthern Horth America.- 227,342 49.769 82.0 18.0 27,588 6,029 10.0 2.2 14,791 20,529
Canuto ^^^^ 217 884 48 385 81.8 18.2 26,904 6,431 10. 1 2.0 14,738 19, ,,59
Ne^oundïand'and »!oi3 li 383 86.7 13.3 190 598 1.8 5.8 «3 770 Labrador.
Southern Horth America.. 139,743 100,188 58.2 41.8 27,283 14,709 11.4 6.1 47,857 82,115
Mexico 36 474 11 138 76.6 23.4 18,239 2,236 38.3 4.7 7.495 8.108
CcnVS'Amcrïcal 30 386 614 98.0 ZO 1,679 156 6.4 . 5 27,587 399
Brffish West Indieï 11 729 2,371 83.2 16.8 789 86 6 6 . 6 8,041 2,058
Cuha 5 678 84! 382 6.3 93.7 2,601 12,192 2.9 13.5 1,609 69 999
Netheïlanü'West in- 50,742 75 99.9 .1 3.341 (>) 6.6 («) 4 (>) dies.
South America 268,967 38,224 87.6 19.4 64,091 25,648 17.6 8.8 168,281 7,755
Argentm?""""" 9 111 26 869 25.3 74.7 6,743 20,820 18.7 57.9 1.332 3,236
BraU105 982 4 230 96.2 3.8 9,005 1,843 8.2 l7 96,337 2.1 0
Chile39 099 879 97.8 2.2 3,740 166 9.4 .4 120 -12
Colombtal"-"- 74 843 639 99.2 .8 14,233 70 18.9 .1 60,30» 44
PerS «3» s&s 93.5 «.s 1,353 300 15.2 4.0 g *
Uruguay 1 572 2,305 40.5 59.5 590 864 15.2 22.3 156 1,440
vSS:::::::::::: aisoi * 44 99.8 .2 16,473 ss ei.4 .1 8,954 2
«uiope 242,876 397,220 14.8 24.2 82,680 44,201 6.0 2.7 15,914 63,755
fusirial... 757 3,350 18.4 81.5 178 103 4.3 2.5 1 177
Bcfgium:::::: 10,737 23504 31.4 68.6 4,930 321 14.5 .9 m m
Czecbrelövakia 785 22 377 3.4 96.6 156 241 .7 1.0 2 303
Denmark "." 541 1 340 28.8 7L2 223 341 11.9 18.1 31 «1
v^r^T 23 267 55 907 29 4 7a 6 5,684 2,346 7.2 3.0 575 6,468
gSSSsiv:::: tSS m,Z ei £2 hot» i«n n.s 3.8 «4 2,663
Itïïy * 15 725 46 934 25.1 74.9 10,044 6,042 16.0 9.6 785 22,1/0
Neaerbnas:" ™- 1*936 22)016 37.0 63 0 3,714 11.120 10.6 31.8 1,831 3,347
Norwav . 4,141 12,679 24.6 76.4 519 226 3.1 1.3 17 3,26»
Polandaïïd'Danzlg.:: 866 1,088 44.3 65.7 689 335 30.1 17.1 (') 265
Soviet Russia in 6,830 6,781 54.2 45.8 5,683 1,942 45.1 16.4 620 1,546
SpauTPe' 6,482 10,139 39.0 61.0 3,329 94 20.0 6 137 8,292
swede's:"-—^338 5,934 82.7 17.3 437 «« l 1 20 139
«S-::::: glS 23 SI 29.^ «,3 £1 ïl «5
British Malayalllllll 5<k8 ^125 99.8 2 54,470 6 65.6 >) 634 55
Cevlon 10,614 391 96.4 3.6 5,673 104 52.0 1.0 4.648 194
Chtoa°*iïóng: Kong, 4^289 26,522 64.1 35.9 36,364 4.400 49.3 6.0 2,214 8.8B
Japan"^. 174,440 31.909 84.5 16.6 167,038 1,106 80.9 .5 3,970 6,736
Netherland East In- 32|S61 1,67» 96.1 4.9 19,640 51 67.4 .1 7.798 599
Pcreta 392 4,066 8.8 91.2 266 6.0 . .. 110 46
Turkcy (Europe and 2,001 6, 084 24.7 75.3 1,428 4,520 17.7 65.9 409 1,133 Asia).
Oceania 12,188 6,934 63.7 36.3 8,582 6,194 44.9 32.4 1,806 581
Aultraïia 6 864 5 040 54.9 45.1 4,424 5,284 35.4 42.3 936 211
NewSana::::::::: ha n.* 28.6 2.038 910 45.0 205 s,o «7
AMea 26,798 6,087 81.5 18 5 10,384 5.217 3l 6 15.9 7,985 SOI
Sïêria-andSmiiïa:: L629 189 89.6 10.4 899 21 49,4 1.2 13 V»
BritishAfrica- K7 U 454 34.3 750 10
fSF::::::::: ïSÏÏ Jkl SS Ï8Ï Sï I *~8|'
Egypu?.::::::::::::: l:^» 29.0 70.4 -992 2,57a 24.7 66.7 1 «»
1 Less than $500.
Photographic reproduction.
' Less than one tenth of 1 per cent.



ECONOMIC CLASSES, AND PRINCIPAL COUNTRIES, 1931
than the genera! Imports because of carpet wool which was originally classifled as dutiable but later enterpd aflects to a smaller degree statistica for Argentina, British India, and other wool exporting: coMtries thousands of dollars]
Foodstuffs— n . a , 
Cont'd. Semimanufactures Finished manufactures
Percent Value Percent Value Percent _ Country
Free abt" ^ee «Jf Free ™£ Free ™- Free ™"
15.9 9.3 267,648 104,394 12.8 5.0 256,012 293,263 12.2 14.0 Grand total.
5 3 7.4 54,094 17,601 19.9 6.4 129,869 5,609 46.9 ÏÖ~ Northern North Am»«
5.4 7.4 54,918 17,600 206 6.6 121,263 5,594 45.5 2.1 Canada
.8 7.4 175 p) L7 p, s.596 15 82.7 .1 Newfoundland and
Labrador.
|! ftS tS S 8! :i %% *S 'i! II
O O 15.104 (.) 29.7 P) 32,293 74 63.6 .1 Nethëriand West In-
dies.
8.7 9.0 404 2,674 1.1 7.4 633 140 L8 .4 Argentina
84.7 1.9 286 61 .3 .1 354 216 .3 .2 BrazU
.3 L8 34.993 87.5 246 1 .6 (tj Chili'
nt ™2 .JS ? 1 « 257 623 .3 .7 Colombia
-2 P) 6,843 181 76.3 3.0 167 40 1 9 4 Peru
4 i fn1 -S" ï r S 826 « 21.3 p> Uruguay.
314 W 21 1 .1 p) 1,353- 3 5.0 p) Venezuela.
L0 3.9 76,564 73.356 4 7 4 4 67,717 315.909 41 13 2 Europe.
J5 ff 171 516 42 12.6 410 2.553 10.0 62.1 Austria
» ï-5 4,582 W-m 13 4 31.8 1.175 11,779 3.4 34.4 Belgium.
Y« 5" 2,222 22 9.6 117 19.610 .8 84.7 Czechoslovakia
LS 2H „ 21 391 1.1 20.8 266 197 14.1 105 Denmark.
7 8.2 2,086 5,743 2 6 7.3 14.921 41,351 18.8 52.2 France.
Ti «1 fiïï 'T-?33 »•? M.1 ll.SSI 58,618 9.4 461 Germany.
«2 i'?20, '-039 3 1 2.5 2,977 17,163 48 27.4 Italy.
5.2 9.6 5,262 5,330 15.1 15.2 2.129 2.220 6.1 64 Netheriand
49 J£2. , IS 5"5 .11 168 334 8 6 17-1 Poland and Danzig
49 12.3 292 1.593 23 126 234 699 1.9 65 Soviet Hussia in Eu-
f 49.9 2.272 230 13.7 1.4 744 1,523 4.5 9.2 SpaT
m w t * % 701 £1 3>'° 3 689 10.3 10.8 Swodën.
V. *?-2 H °-m 3 24.4 2,088 10,024 9.0 43.4 Switzerlanrl
7.6 4.7 8,366 10.632 62 7.8 21.639 44.249 16.0 32.7 UnitedKingdom.
13.3 3.3 61.14» 9,746 10.6 1.7 11.834 66,522 2.1 11 6 Asia.
. *■! ' 554 '-039 4.4 1.8 391 28.900 .7 49.4 British India
42- Li g V W2 li g L8 i SS.01!*
30 7.9 7.800 5.802 106 7.9 911 10.468 1.2 R2 China, Hong Kong
1-9 3.3 1,873 2,633 .9 1.3 1.658 21.434 8 10 4 JapanKwantuDB
22.8 L7 4,798 29 140 .1 '328 L000 1.0 29 fe.and East In-
1-0 (') O W P) 16 4,020 .4 90.2 Pcrsla
8.1 14.0 110 103 1.4 1.3 54 ' 327- .7 4 0 Tu7key (Europe and
Asia).
ii ?•? go 39 3.0 .2 1.218 119 6.4 .6 Oceania.
&« 78 57| 38 4? „;3 929 107 7.4 .9 Australia.
Ia " '•■ 5 1 .1 P) 254 8 57 .2 New ZealawJ.
K? r? 7,J2 3?5 23-? 1 0 665 244 2.0 . 7 Afxica.
.7 6.5 620 12 341 .7 96 37 5.3 20 Algcria and Tunisia.
« fi q ,„ , „ ,„ British Africa—
S "8 2 W 1-2 m 87 7 6.6 .5 East.
44 6 "m" 4 „iS 2,9 „,? «-2 241 5 64 .1 South.
m V, r 32-° 36 9 . 3 .1 West.
P) 22 56 8 1.4 .2 140 52 3.5 1.-3 Egypt.
Photographic reproduction.



When I placed my figures before a well-known authority on economics, he wrote as follows: „I could not accept the figures which you quote as conclusive evidence in support of your argument. You omit any reference to the normal interchange of goods and financial service." The „normal interchange of goods" no doubt refers to the exports from the United States, which as already remarked, are always or nearly always greater in value than the imports. But. as suggested above, the United States did not. and could not f o r c e the Debtor countries, nor any other to take their exports. In the case of Germany, which is not one of the Debtor Countries to the United States, that country exported to the U. S. during 1929 and 1930 commodities to a total value of $431.669.000 of which to a total value of $ 163.890.000 came in free of duty. As to „financial service" this of cour se refers to the loans which several European countries obtained from the U. S., apart from the War Debts, after the war. These loans, which were emitted to the public in the U. S.. totalled ± $ 8.200.000.000 up to the end of 1929. After that year came the general collapse of prices, re which the Economie Surveg, already quoted says *): „The collapse since the latter part of 1929. not only of the average level of wholesale prices, but of the whole pricestructure. has been the most alarming manifestation of economie disorganisation in the present depression. It is so far-reaching and complete, that it is unlikely to have been produced by a single cause. The variety and contradictory nature of the explanations offered, even in expert circles, leads in itself to a suspicion that the causes are complex and not fully understood. It is not only the monetary mechanism but the whole economie organisation of the world that has been affected. and it is unlikely that any single weakness would have caused such a general collapse". This general collapse caused confidence to collapse at
i) Page 115.
I



the same time, and hence the large loans which the United States had after the war been making to Germany and some other European countries, and which had, especially between the years 1925 and 1928, enabled many of the „Debtor" countries to carry on, came to a stop. The result has been that the United States remained with large stocks of gold on their hands. These stocks, as the following diagram shows:



Changes in the Gold Reserves of Central Banks and Treasuries 1.
* Including the Banco de la Nación Argentina, which, although not a bank of Issue, acquired a considerable gold reserve in 1927 and 1928 in view of a proposed banking reform . practically the whole of this reserve was subsequently exported.
The following countries are excluded throughout : Union of Soviet Socialist Republics, Cuba, Mexico, Gentral-American Hepublics, Paraguay, the Philippines, Stcaits Settlements and Turkey.
Photographic reproduction.



began to rise particulary after 1929 i. e. AFTER-the pricecollapse. It is important to note this, in order that we should not attribute the price-collapse to the accumulation of gold in the United States, France, Belgium, Holland and Switzerland, but rat her the reverse. Gold has the habit of taking cover in the safest places, and the assumption that flight of capital is the chief culprit of the accumulations is therefore in alle probability the right one, the more so as we have proved that a refusal of the U. S. to take payment in commodities before the crisis, exists only in the fancy of the experts already quoted.
The scarcity of gold, moreover, already existed 7 years before the crisis broke out 1) for as the Report o/ the Gold Delegation points out, in 1922 „The distribution of the world's gold reserves was very uneven, and a shortage of gold for monetary purposes, resulting in a scramble for gold, was anticipated." The scramble for gold was indeed, by the various devices already named and explained, cleverly concealed from the general view. It might have remainded so concealed for a long time, if an event had not occurred, viz. the demonetisation of silver. to which we must devote the second section of this treatise *).
Is is. perhaps, not entirely superfluous to remark that whereas the United States tariffs, as proved by the statistics, did not cause the collapse, stfll a reduction of them would be very helpful in the present pitiful state of world-economy and this of course applies to all tariffs generally. A reduction of the United States tariff, whereas it could not. of itself, cause a revival of trade, would have a moral effect upon the world generally, which would, to some considerable extent perhaps, restore confidence.
The American 1932 returns have not yet come to hand in detail The following rough figures have however been published for 1932. They do not include precious metais.
') See also pages 66 et seq.



Total Export of commodities from 115. to Europe $785.000.000 „ Europe to U.S. „389.000.000
" , Gr.BritatotoU.S.„ 74.688.706
Amount paid by Great Britain to U.S. against
War Debts ,. 91.800 000
Whereas in 1931 even, which was the first crisis-year, British Imports into the U. S. exceeded British War Debt payments by $ 75.000.000. the year 1932 was the first year during which the payments exceeded the Imports of commodities into the U. S., the shortage amounting to about $17.111.000. This reversal of the position is of course the effect of the f allen prices and of the crisis, not a cause of it. Europe, including Great Britain buys more commodities from the U. S. than she sells to them. This has always been the case and it is one of the features of international commerce, which is carried on for profit to both buyers and sellers. The British gold-remittance of December, 1932 far exeeded the difference between British Exports and British War Debt payments and was probably effected chiefly for propaganda purposes.



22.—FOREIGN COMMERCE OF THE UNITED STATES
[AU statistica of foreign commerce in this section are compiled in the Bureau of Foreign and Doraestic Comraerce, Department of Commerce. The geographic area corered by these statistics, except as noted, ii the United States customs area which includes Alaska, Hawaii, and Forto Rico. See headnote, Table 476 Other expltnations of the trade tables are giren in the introduction to the Annual Commerce and Narigation of the United States]
Ho. 469. — SUMMARY OF FOREIGN TRADE OF THE UNITED STATES
Note.—Figures for 1911-1915 cover Qscal years; thereaftcr calendar years are shown [AU figures in thousands of dollars]
I I I I |
1811-1915, 1915-1920,1 1921-1925. 1926-1930, .„,„ .£M m,
average average average average I
Merchandise:
Exports 2,370,539 6,521,190 4,397,026 4,777,313 5,240,995 3.843,181 2,424,289
United States merchandise 2,331,648 6,416,513 4,310,221 4,687,788 5,157,063 3.781, 172 2,377,982
Reexports of foreign
merchandise 38,8911 104,677 86,805 S9.526 83.912 62,009 46,307
General imports 1.712,319 3,358,354 3.450,103 4,033,469 4.399,361 3.060,9081 2.090,685
I
Excess of exports 658,220 3.182.838 946.924 743,845 841,634 782,273 333,654
Gold:
Exports 83,173 233,248 82,738! 222,094 116,583 115,967 466,794
United States gold 81,151 255,867 81,183; 220,373 116.431 J14,715 466,774
Foreign gold 2,022 7.382 1,567 1.721 162 J.252 20
Imports 85,869 382,022 347.425 255,523 291,649 386,054 612,119
Excess of exports (+) or
imports (—) j —2.796 -148,7731 -264,686 -33,434 -175,066 - 280,087 —143,323
Silver:
Exports 61,432 143,4471 19,174 78,566 83,407 54,157 26,485
United States Silver... 56,864 127,414 52,662 61,118 62,838 43,550 21,719
Foreign silver 4,668 16,0341 26,512 17,448 20,569 10,607 4,766
Imports 38,739 64,217! 69,409 59,898 63,940 42,761 28,664
Excess of exports (+)
or imports {-) +22,693 +79,231 +9,765 +18,608 +19,467 +11,396 —2,179
Excess of exports C+) or I imports (—) of merchandise, gold and silver I +678,117+3,093,293 +692.0031 +729,078 +686,035 +513, 582 +186, 150
Imports of merchandise
for consumption 1,693,029 3,288,839 3,422,748 4,020,350 4,335,572 3,114,077 2,038,455
Entered for immediate
consumption 1,518,447 3,075,230 3.050,279 3,602,947 3,925,379 2,765,315 1,881,011
Withdrawn from ware-
house 179,582 213,609 372,469 417,403 413,193 348,762 207,444
Free 966,141 2,262,412 2.088,932 2,645,610 2,880.128 2,081,123 1,391,093
Dutiable 731.887 1,028,245 1,333,816 1.374.740 1,458.444 1,032,954 696,762
Per cent Tree 66.89 68.79 61.03 65.81 66.38 66.83 66.64
Duties calculated 283,408 227,035 478.911 650,743 684,771 461,790 370,771
Ratio of duties to total imports for consumption,
percent 16.69 6.90 13.99 13.70 13.48 14.83 17.75
Ratio to dutiable imports. 38.72 22.08 35.90 40.06 40.10 44.71 53.21
Entered for warehousc.... 193,872 283,124 399,824 430,621 473,982 295,593 209,624 Remaining in worehouse,
endofperiod | 94,408 249,291 172,859 200,469 248.642 134,936 136,432
> Period July 1,1915, to Oee. 31,1920.
Photographic reproduction.
4



Imports of merchandise into the United States of America1)
thousands of dollars]
Imports
1910- 1921- I C0UDtry
1914, 1925, 1S25 1926 1927 I 1923 1929 1930
average average
1 
836. 493 1.049.494 1.233. 181 1.285. 563 I. 278, 466 1, 243. 749 1,332, 630j 908.645 Europe'
723. 829 884,987 1.035.645 1,070.229 1,050.868 1,054.460 1, 105.968! 745,775 6. Northwestern and Central.
9.530 34,073 -11,033 44,018 47,8961 46,086, 52,986 45,525 Sweden.
8.086 18,498 23,289 25,055 22,231 21.726 21,235 18,224 Norway.
2,597 6,029 4,325 5.508 4,145 3,938 4,561 3,181 Denmark.
71 106 97| 178 92 327 544 437 Iceland.
278,897 '355,781 412,705 383.198 357,931 348,540 329,755 209,994 United Kingdom.
•I 269 1,269! 1,476 1,597 1,273 4,260 5,364 Irish Free State.
" 4Ö.36Ó 54 335 69,01* 77.793 72,234 75.074 74,048 51,536 Belgium.
130.130 147.875 157.433 152,020 167.800 158.748 171,485 113.775 France. ^
34 937 70 625 92.539 101,855 87.242 83,604 83,853 51,193 Netberland*/
i IS. 077 4,097 5,858 9,419l 10,611 12,12l| 12,235 7,780 Austria.
17 373 22.838 28.302' 31.726 36,783 46,129 29,584 Czechoslovakia.
"*(•)" 'O03 71» 873Ï 941 1,215 1,839 936 Hungary.
176.462 132,490 164,251 198,495 200,554 222,130 254,68S 176,981 Germany.
24.082 38,843 40,267 42,038 45,866 42,895 48,350 31.265 Switzerland.
19 254 17 719 27 397 34.921 31.055 32,735 43,056 37.797 7. Worthaastern.
'400 320 1.235 432 1.064 875 544 Estonia.
«153 7 549 7.159 9.108 8,670 9,872 11,225 10,454 Finland.
» 578 3,709 5.982 4,469 3.S36 4,050 1,772 Latvia.
265 767 947 620 410 533 226 Lïthuanla.
2.369 2,527 4 147 4,825 3,004 4,853 2,838 Poland and Danlig.
Ï9L Ï3Ï 4,557 12,905 13,503 12. 139 13,949 21.520 21,963 Soviet Russia in Europa.»
79,589 116,147 140.431 151.081 149,753 143.673 161,912 111,083 8. Southwestern.
267 2,495 1 743 1,595 1,814 1,615 1,445 1,465 Azores and Ma dei ra
Islands.
11 16 34 31 53 30 15 8 Gibraltar.
51,148 79.141 102.205 102,526 108,970 101.681 117,067 79,321 Italy.
6.552 3,855 3.651 5,560 4.565 5.329 7,326 4,927 Portugal.
21,610 29,639 32,798 41.369 34,351 35.01S 36.059 25,362 Spain.
13 827 31 642 34 718 29.632 44,792 17.881 21.694 14,190 8. Southeastern.
'376 l'029 968 1.295 892 707 881 814 Bulgaria.
3,329 22! 255 26.187 16,008 29,646 14.610 17,757 11,793 Greece.
18 160 228 195 226 121 186 38 Malta, G010, and Cyprus Islands.
048 266 302 1,098 649 677 559 814 Rumania
8.859 7.421 5.602 8,981 12.394 - --- Jm^y in Europe
'996 511 1,431 1,155 935 1.708 2,311 1,532 ï ugoslavia and Al barna.
258.5341 942,879 1,819.126 1. 400, 701' 1. 256. 757|1,168,9281.280,279 856,496 Asia
13 576 21 279 28.967 26,234 26,874 41,791 35.068 24,964 10. Western.
1,'SOS 2.'221 3.286 2,892 3,060 3,315 2,457 1,742 Aden.
1 if 71 90 174 66 Arabia.
} 2.517 4,973 4,1451 4>30g 5,744 6,241 3,765 Iraq.
_ II 248 280 182 165 Palestine.
} 2,337 4.450 2,945{ 3 ^ 4 ^ & 200 li79j Syria.
1 377 4.773 7 212 8,401 7,527 8,283 8.648 5,797 Persia.
10|392 9.402 9,046 7.851 7.676 18,388 12,166 11.638 Turkey in Asia.'
119 750 425 025 716.416 815,182 857,887 586,072 629,682 436.794 II. Southern and South-
eastern.
56.3561 109.020 144,503 150,930 131,003 148.932 149,332 104,148 British India.
•9,966 ' 27.059 48. 159 55,805 40,846 30,737 32,437 20,707 Ceylon.
24.625 153.247 314,023 383.800 277,784 204,364 239,164 144,032 British Malaya.
V») (5) 56. ld 68,395 51.600 53,890 49.433 33,453 Java and Madura.
9,191 54, 962 39,6741 61.222 39,788 32,152 32,868 24,437 Other Netherland East
I ■ iiiüies.
') Photographic reproduction.



No. 538.—FREE AND DUTIABLE GENERAL IMPORTS BY PRINCIPAL
COUNTRIES
NOT».—For 1929 and 1930 dutiable imports for consumption from China were less and the free imports correspondingly greater than the general imports because of carpet wool which was originally classified as dutiable but later entered free under special provision. See Table 527. The reelassification of carpet wool from dutiable to free affects to a smaller degree statistics for Argentina, British India, and other wool exporting countries. Sec headnote, Table 527
[All figures except percentages in thousands of dollars]
1910-1914, averago 1929 1930
Country Per Perl Per
Free Dutiable cent Free Dutiable cent Free Dutiable cent
free free free
Grand total. 805.736 783,078 53.8 2,843,354 1,556,007 64.6 2,081,110 1,009,798 (7.0
Northern North America.. 64,448 64,072 64.4 398,937 115,433 77.6 335,847 78,503 81.5
Canada 63,855 53,358 54.5 389,225 114,271 77.3 325,216 77,136 80.8
Newfoundland and Labrador _ 565 707 44.4 9,250 1,161 88.8 10,169 1,326 88.5
Southern North America... 97,122 131,495 42.5 225,142 242,019 49.2 201,727 146,628 58.0
MeziCO 59,387 11,092 84.3 85,962 31,776 73.0 65,993 24,300 69.7
Central American countries 16.808 561 86.8 39,471 5,299 88.2 36,145 2,432 93.6
Cuba 4,789 117,288 3.9 9,510 197,911 46 8,459 113,490 6.9
Other West Indies and
Bermudas 16,138 2,655 86.3 1.682 1,497 52.9 101,130 4,996 85.3
South America 191,833 15,025 92.7 536,844 102,913 83.9 363,025 70.492 83.7
Argentina' 22,758 10,120 69.2 44,009 73,572 37.4 22,719 49,172 31.6
Bolivia 2 (') 93. 2 33 347 8.7 38 114 25.0
Braxil 110.189 689 99.4 203,184 4,502 97.8 126,974 3,880 97.0
Chile 22,527 354 98.5 99,194 2,831 97.2 53,051 1,762 96.8
Colombia. 10,952 994 91.7 103.111 414 99.6 96,521 618 99.4
Ecuador 3,158 212 93.7 4,920 910 84 4 4,130 1,423 744
Peru 8,969 811 91.7 25,532 4,636 84.6 17,530 3,755 82.3
Uruguay 3,539 946 78.9 5,200 13,477 27.8 4,850 7,503 39.3
Venezuela 8,782 340 96.3 51.152 7299.9 36,788 80 99.8
Europe 332,967 503,532 89.8 511,676 820,951 38.4 385,328 623,518 42.4
Belgium 17.288 23,072 42.8 23,908 80,140 32.3 20,132 31,404 39.1
Ciechoslovakia _ 13,569 32,560 29.4 7,524 22,060 25.4
Denmark 1,966 631 767 2.233 2,328 49.0. 1,323 . 1,858 41.6
France 41,227 88,903 31.7 52.410 119,075 30.6 37,818 75,957 33.2
Germany 63,746 112,716 36.1 93.645 161,043 36.8 70,245 106.736 39.7
Greece 474 2,855 14.2 1,839 16 918 10 3 1,513 10,280 12.8
Italy 17,321 33,828 33.9 26,136 90,931 22 3 23,270 56,052 29.3
.Nelherlands 10,151 24,786 29.1 26,196 67,657 31.2 19,949 31.244 39.0
Norway 2,126 6,900 26.3 10.238 10,997 48.2 8,124 10.101 446
Soviel Russia in Europe. 15,418 3,713 80.6 11,476 10,014 53.3 12.841 9,122 68.5
Spain 10,071 11,539 46.6 12,362 23,697 343 9.570 15,792 37.7
Sweden 1,955 7,675 20.5 41,909 11,077 79.1 38,047 7,478 83.6
Switzerland 561 24,121 2 3 6,057 42,293 12 5 4.291 26,973 13.6
United Kingdom 140,814 138,083 50.5 157,936 171,814 47.9 106,162 103,832 50.5
Asia 187,288 71,238 72.4 1,039,166 241,115 81.2 633,212 178,283 79 8
British India' 30,175 26,181 53.5 59.334 89,990 39.7 36,693 67,455 35 2
British Malaya 24,318 307 98 8 238,281 883 99.6 143,623 408 99 8
Coylon 9,430 536 94.6 30,769 1,668 94.8 19,762 945 95 4
China' 25,613 9,710 7 2 5 110,769 55,464 66.6 66,015 35,449 661
Netherland East Indies. 4,676 4.518 50.9 75.053 7,248 91.2 63,123 4.7CS 91.8
Hong Kong 1,717 1,337 66.2 7,635 4,031 65.4 5,657 3,345 628
Japan 66,749 18,250 7 8 5 377.589 54,284 87.4 238,573 40,467 85.5
Pbilippine Islands 19,412 18 99.9 125.769 23 99.9 109,387 2 99.9
Oceania 12,221 5,058 70.7 33,764 22,793 69.7 22,668 10,126 69.1
Australia 8,256 4,056 67.1 19,448 12,520 60.8 10,606 6,845 60 8
New Zealand 2,821 937 761 10,697 10,137 51.3 8,492 3,129 72 9
Africa 19,909 2,664 88.2 97,622 10.786 90.1 59,305 8,243 87.8
British South Africa 696 1,767 28.3 5,803 3,853 60.2 4,395 2,577 63.0
British West Africa 660 98 80.8 29.122 878 97.1 18,848 1,469 92.7
Egypt 16,618 269 98.4 37.439 2.235 94.4 12,043 1,547 88.6
1 See headnote, Photographic reproduction.
> Less than $500.



chapter v
HAS AMERICA REFUSED TO ACCEPT SERVICES
IN PAYMENTS OF WAR DEBTS?
Another reproach, which is levelled at the Creditor countries, and chiefly the United States, is that they have refused to accept services in payment of War Debts. But here again we have to deal with a parrot-cry as in the
United States Tourist Expenditurea in Foreign Countries
(Thousands of dollars)
Country 1931 1929 1927 Country 1981 1929 1927
Europe and the Europe and the
Levant* Levant—Con-
Austria . . 2.300 2.889 2.700 önued.
Belgium . . 1.175 1.736 10.000 Russia . . . 10.000 1.714 1.200
Bulgaria . . 100 200 Spain . . . 900 1.629 1.600
Czechoslovakia 600 1.268 900 Sweden . . 2000 5.743 4.000
Denmark . . 700 1.101 1.500 Switserland . 7.610 10403 15.000
Eovot . . . 2.750 4 268 7.000 Turkey . . 400 950 750
Estonia . 100 300 United Kingdom 27.000 40.590 40.788
Finland . . 800 879 763 Yugoslavia 400 356 300
France . . 110.000 137.143 190.000 Nort America: „™ „„„
Germany. . 8 250 15.000 20.000 Canada . . 239.000 289.000 '197.000
Greece . . 1.600 1.583 953 Mexico . . 44.000 46.000 »10jOOQ
Hungary . . 300 1.068 8000 West Indies:
Iris Free State 2.000 4.268 8000 British West
Italy . . . 16.500 30.433 81550 Indies (htclo-
Latvia 92 324 170 ding Bermuda 17.500 10.140
Lithuanla! 800 300 300 Cuba . . . 11.500 21.000 12 500
Netherlsnds . 210 933 750 Panama . . LOO0 660
Norway . . 1.070 1.545 804 Far East: 
Palestine . . 1.400 2.148 1.150 China . . . 6.000 3.2 70 8.500
Poland . . 600 1.250 6.000 India . . . 1.500 1.000
Portugal . . 600 1.071 300| Japan . . . 8200 8.460 <000
Rumania . . 1.100 870 3061 Total . . 502.757 650.915 584.384
' Excluding tourists going by sea. 2 Excluding border traffic.
Source: Based largely on information submitted by representatlve» abroad of the United States Government.



case of the alleged refusal to accept commodities. When we refer to the official Balance of payments of the United States already quoted, we shall find that American tourists spent all over the world. in 1927 $ 584.384.000 in 1929 $ 650.915.000 and in 1931 $ 502.757.000. The figures for 1930 are not given, but we may assume the 1930 total to have been about $ 550.000.000. As may be seen from the above table. the amounts spent by Americans in the War Debt countries during the years 1927. 1929 and 1931 totalled. respectively, $ 277.988.000. $ 217.934.000 and $ 168.975.000 and if we apply the average to the two years 1929 an 1930, arriving at an average for these two years of $221.000.000. we shall be fairly correct. The authority already quoted estimates the expenditure of all foreign visitors in the United States for 1931 at $ 112.000.000 or about one fifth of what Americans spent abroad, and we may therefore reduce the $221.000.000 by roughly $44.000.000. thus arriving at a balance of $ 177.000.000 which the United States paid to the War Debt countries for services on an average in 1929 and 1930.
In view of these figures again, we ask how any man in his senses can say that the United States have refused to take payment in services? Moreover, in the case of tourist expenditure the profit of the country which is visited by tourists, is very large, and if we assess it at 50% we shall probably not be far from the truth. We thus arrivé at another $88.000.000 to be added to the profits on the commodities which the War Debt countries must have booked on their exports to the United States and to the wages they paid to their workpeople who produced those exports.
The American trade balance nearly always shows a surplus in favour of the U .S. as already mentioned, and to arrivé at that surplus by statistics is easy enough. But to obtain a true account of the U. S. Balance of payments is a much more complicated affair. Since the last ten years the Government at Washington has published the annual treatise already mentioned above, several tables of which we have reproduced. We now reproduce Table 25 (page 76)



Table 25. — Balances of International Payments of the United States. Calendar Years 1922—1931—-A Condensation of Revised Estimates
(Millions of Dollars)
ui
Class of transactions (gross or act) 1922 1923 1924 1925 1926 I 1927 1928 1929 1930 1931
COMMODITIES (ADJUSTED)
Exports 4.121 4.868 4.834 5.177 5.044 6.091 6.338 5.447 4.095 +2.623
Imports 8.419 4.162 8.952 4.544 4.766 4.508 4.468 _4799_ 3.294 —2.254
Balance of trade (adjusted) .... +702 +206 +882 +688 +278 +583 +866 +648 +801 • +869
MISCELLANEOUS INVIS1BLE ITEMS
Fresght: Ocean, Great Lakei, and railway (net) —79 —88 —64 —84 —96 —66 —82 —66 —96 —72 Expenditurcs by American tourists:
Canada and Mexican frontier —100 —181 —169 —186 —201 —281 —298 —884 —822 2 —288
Overseas, including West Indies .... —846 —818 —874 —400 —422 —466 —681 —684 —489 2 _287
Expenditures by foreign tourists in United States +87 +104 +107 +112 +148 +168 +168 +188 +157 +112
Oceari-borac passenger trafflc 3 +58 +60 +58 +68 +69 +89 +44 +47 +49
Interest on American private funds abroad
(long and short term) +566 +594 +686 +689 +740 +800 +896 +979 +916 +674
Interest on foreign funds In United States
(long and short term) —144 —180 —192 —239 —268 —281 —359 —414 —300 —126
War-debt receipts (prlnclpal) +82 +92 +28 +26 +85 +46 +60 +62 +77 +21
War-debt receipts (Interest) +126 +167 +160 +160 +160 +160 +157 +145 +164 +92
Other governmental transactions (net) . . . —46 —66 —58 —61 —49 —29 - 57 —92 —81 —98
Immigrant remittances (net) —265 —229 —229 —285 —218 —206 -218 —223 —166 —168
Charitable and missionary contrlbutlons . . —75 —70 —56 —60 —46 —49 — 51 —49 —49 —89
Other items (net) 4 +46 +57 +68 +74 +74 +74 +24 +25 +52 +57
Total, commodity and miscellaneous (net) +557 +208 +802 +618 +205 +588 +658 +877 +718 2 +257
1 For purporic of compnrlnon with cutlmntcu of prcvloun years themlscellaneous short-term credit* nrc carrled In thll table af „adjustments for dlffcrcncco la ycar-end lag"
2 A act flgurc I It lncludcs no payments to American passenger vcsscls,
3 Largely n deductlon from American tourlit expenditures ovcracaa ,
4 Includes Insurance, motlon-plcture royaitlcs, cablc charges. Canudlnn electrlc power, press subscrlptlons, patents and copyrights, and advertlslng.



Class or transactions (gross or net)
NEW PRIVATE LOANS, INVESTMENTS
AND DEPOSITS Net increase la American long-term invest-
ments abroad (per value) 
Deduct bond discounts and underwrltert'
commlsslons on above 
Net cash payments for above • , ■ •
NEW PRIVATE LOANS i INVESTMENTS AND DEPOSITS—Contlnued
Net increase in long-term Invcstmcnts in United States for forelgncrs ,
Change in nebt debt of American banks to forelgncrs 
Nét private capital movement (long and short term) ■ , •
OTHER BALANCING ITEMS
Gold shipped or earmarked (net) 
Shipments of American paper money (net) ■ Add for act dltcrepancy doe to inaccurate figures, ommisslons, etc. 
1922 | 1923 | 11)24 | 1925 1926 1927 1928 I 1920 I 1980 I 1981
—857 —258 —869 —872 —808 —972 —1317 —791 —411 +164
+101 +48 +125 +119 +121 +119 +122 +26 +66 +11
—766 —218 —744 —758 —687 —868 —1195 —765 —845 +166
+8 +240 +11 +198 +147 +158 +477 +446 +50 +58
+875 +s +216 —61 +859 —226 +18 —468 —765
—878 +88 —517 —621 —181 —695 —944 —806 —780 —547
—284 —295 —216 +102 —72 +154- +272 —190 —276 +176
+40 +50 —20 —80 +20 —10
+15 +4 —49 +86 +48 —47 +14 -1-49 +828 +194
MS



which af fords condusive evidence that the gold-accumulations in the United States cannot have been caused, as to the great majority, by the alleged refusal to take payments in goods and services, since any favourable balance of payments was applied to loans to foreigners, the average for 1929 and 1930 being about the same as for the preceding 6 years.
The stoppage of these loans, especially in the case of Germany should be largely attributed to municipal and
Table 23. — Gold Movements to and from the United States by Countries, 1931» Including Corporation Figures for 1929 and 1930
(Thousands of dollars)
Exports Imports
Country . 1 - 
1981 1930 1929 1981 1930 I 1929
Belgium . . . 15.607 24 1
England ... 219 289 21.086 7.015 14 62.396
France . . 363 908 73 808 65.381 19.394 183 202
Germany . . . 1.047 201 2.384 37.073 27 46.773
Italy 5.320 3.000 9 4 5
Netherlands . . 50.327 1 17 5
Portugal .... 2.088
Sweden .... 36 1.341 5.573
Switserland . . 19.823 10007 66
Canada .... 116 86.746 890 81.252 43.618 73.880
Central America . 100 1.062 1.090 1.697 1.030
Mexico .... 3.052 416 3.605 25.319 20806 9.174
Argentina ... 50 141.263 20.272 72.478
Brazil 87.776
Chile 438 528
Columbia . . 16.116 9.097 5.292
Ecuador . . . 1.015 1.661 1.373
Peru 1.028 7.622 6.896 1.921
Uruguay . . . 6.080 8364
Venuzuela ... 62 965 1.600 1.078 4.747 883
Australia . . . 4.870
British India . . 87 S.064
GhinaandHongKong 83 401 2.511 34.323 22.612 1.727
Dutch East Indies 50 1.280 4.870 1.762 1.199
Japan .... 42 124 199.328 156.609
Philippine Islands 3.740 3 715 3.262
New Zealand . . 220 715
All other countries1 3.893 41 5.735 12.921 '6.700 4.435
Total . . 466.794| 115.967 116.583 612.119 396X54 291.649



imperial extravagance, and possibly in particular to her guaranteed credits granted to Russia on behalf of German manufacturers. These are known to amount to a total of about £75.000.000 (R. M. 1.500.000.000 at par) and were made to a country which is notoriously dissipating it resources and those of others, not only on insane social experiments, but also on openly avowed endeavours to upset social order in the whole civilised world. A country which acts as the custodian of wealth in the shape of gold, is right in refusing to apply that wealth to such purposes.
As the above table *) shows, only 4 War Debt countries exported gold to and imported gold from the United States.
During the years 1929 and 1930 their exports to and imports from the United States of gold were as follows:
Exports to the United States Imports from the United States Belgium . $ Nihil Belgium . * $ 1.000 France . . „ 139.189.000 France . . . „ 335.000 England . „ 21.375.000 England . . „ 62.410.0C0 Italy . . „ 3.000.000 Italy . . . „ 9.000 Therefore there is a balance of their exports over their imports (to and from the U. S.) of nearly $ 100.000.000 during the years 1929 and 1930. Whereas France was on balance by far the largest exporter of gold to the United States, she is at the same time one of the countries which are accused of having deprived the rest of the world of that metal before the crisis began to be quite seriously feit in 1930. As France. during the two years, paid some $ 100.000.000 on her War Debts and imported commodities into the U. S. totalling $ 287.277.00 (of which $ 92.227.000 worth came in free) her exports of gold to the United States cannot possibly have been due to any refusal of that country to accept goods in payment, or services. This applies even more emphaticaUy to 1931 when her
') Borrowed from The International Balance of Payments of the United States 1931, as are the other tables in this Chapter.



exports of gold into the U. S. which amounted on balance to $344.514.000, exceeded her 1931 payment against her War Debt by over $300.000.000. The surplus, therefore. must be largely due to flight of capital.
England, on the other hand, exported commodities to the U. S. in 1929 and 1930 for a total value of $539.744.000 (of which $264.098.000 worth came in free), which total exceeded her payments against her War Debt by about $ 200.000.000, but her imports of gold from the U. S. exceeded her exports of gold to that country by $ 41.021.000.
The other War Debt countries exported hardly any gold at all to the United States. Hence the matter is actually reduced to Great Britain and France, and again I ask: how can any man in his senses hold that the United States refused to accept goods and services in payment of the War Debts, when statistical evidence is all the other way?
The reader will do well to study the Macmillan Report (June '31) in order to obtain very full information as to the causes of the maldistribution of gold before the crisis, which are very clearly set out in Chapters VII and VIII of that Report *). The reader's impression cannot fail to be that the existing stocks and supplies of monetary gold did not keep pace with the world's production of commodities . For whereas in paragraph 147 the Committee distinctly stated that „unless steps are taken to avoid the danger. a fall of prices due to insufficiency of gold will undoubtedly occur in the future", they at the same time declared that ,,given good will and understanding on the part of the world's monetary authorities. the dangers threatening the price level can be postponed for a period of time sufficiently long to deprive the problem of practical importance". In par. 148 they explain that „gold reserves should be held, not primarily against note issues, but to
•) Committee on Finance and Industry. Report presented to Parliament London. 1931.



meet temporary deficiencies in the balance of international payments" and thatthere need be no obstacle to the creation of a much increased volume of purchasing power without any increase in the supply of monetary gold".
What they recommended did not materialise. on the contrary, only three months later Great Britain relinquished tho gold Standard.
It is worthy of note that the Macmillan Report does not refer at all to the alleged refusal of the U. S. and France to accept goods and services against the War Debts. This cry was not heard until after the relinquishment by Great Britain of the gold Standard.



CHAPTER VI
HAS FRANCE REFUSED PAYMENT IN GOODS AND SERVICES?
Now as to France. That country is one of the principal 'War Debt countries, coming immediately after Great Britain, although at a long distance. Unfortunately we do not possess any official publication such as we have from the United States, so we cannot arrivé at anywhere near such precise results as we can in the case of the latter country.
France, although she is one of the most important War Debts countries, is at the same time Germany's largest creditor. France too has been accused of having refused to receive commodities and services from her debtors, chiefly of course Germany.
Now France differs enormously from the United States in that she always has a very large adverse balance of trade For the years 1929 and 1930 in fact. according to the Statistical Year Book of the League of Nations 1931—1932 her adverse trade balance amounted to respectively $ 240.000.000 and $ 373.000.000. We cannot find any figures with regard to any services which she is said to have declined to receive from her debtors in payment, not can we draw up a balance of payments of the Republic as we were enabled to do with regard to the transatlantic Republic
We possess, however, a statement made by the French Finance Minister, M. Fladin. on January 21st., 1932, in the Financial Commission of the French Chamber, to the effect that Germany had paid to the victors, up to June 30th 1931,



Bills of Exchange M. gold 6.100.000.000 ($ 1.462.830.000)
Commodities 11.500.000.000 (,.2.757.000.000)
Ceded territories ,. .. 3.700.000.000 („ 898.000.000)
Total M.gold21J00.000.000 ($5.1170130.000)
These data are borrowed from those published by the Reparation Commission headed by Mr. Parker - Gilbert and by the Bank for International Payments. Out of the above amounts France has received about 52% and her share of the commodities was M. 5.300.000.000 or about S 1.270.000.000. Germany now contends that her payments have reached a total of M. 56.000.000.000. She calculates that the cession of the commercial fleet alone should be credited her with M. 30.000.000.000 gold. Germany also is held to have debited the account in respect of her deliveries in natura at excessive prices.
Anyhow, it cannot be held, in reason. that France and the Allies have refused to take payment in commodities and services.
When a country declares war and loses it. she has to pay a war indemnity. especially when that country has carried on devastations in the territories of her neighbours on an unprecedented scale.
In the case of Germany, however. it may be said, as of Great Britain when she abandoned the Gold Standard: ultra posse nemo obligatoir.
I dunk I have now proved from the official American statistics and from a French official statement, that these two countries have by no means refused to accept goods and services in payment of the War Debts. In the case of America I have proved that her Debtors have paid her fully in goods and services and that the profits which they have made. and the wages their subjects have earned on the exports to the United States have much more than compensated the amounts they made over to the United States for the service of the War Debts.



That refusal, therefore, not having existed, cannot have caused the scarcity or accumulation of gold and it is therefore necessary to look for other causes of that scarcity and accumulation and of the collapse of prices all over the world.
The evidence, I believe, is all in favour of the enormous increase of production of all commodities, both raw materials and manufactured articles after the war, which far outpaced the annual increase of monetary gold-stocks.
Instead of keeping up the value of the other precious metal, Europe, headed by Great Britain, nearly destroyed the value of silver.



CHAPTER VII
RUBBER IN WORLD-ECONOMY
A very striking example of this increased production is rubber of which the United States imported, from 1922 to 1930, chiefly from the British Empire and from the Netherlands East Indies, for a total value of $ 2.362.797.000 Probably three quarters of this total originated from the British Empire, or roughly $1.775.000.000 during those 9 years, which include the years 1929 and 1930. The following table shows the exact figures for each year: (the 1931 total should be much lower; the returns are not yet to hand).
Total value of all Imports Value of Percentage
into the U. S. from imported of the
the world Rubber total
1922 $ 3.419.000.000 $ 101.843.000 2.97
1923 ., 4.162.000.000 „ 185.060.000 4,44
1924 ,. 3.952.000.000 ., 174.231.000 4,40
1925 ,. 4.544.000.000 „ 429.705.000 9,45
1926 .. 4.706.000.000 .. 505.816.000 10,74
1927 „ 4.508.000.000 .. 339.859.000 7,50
1928 „ 4.468.000.000 .. 244.855.000 5,40
1929 .. 4.709.000.000 „ 240.966.000 5.00
1930 ., 3.339.000.000 „ 140.462.000 4,20
Total Rubber value 9 years $2.362.797.000
Now all this rubber came in free into the United States, and as rubber prices, owing to the Stevenson scheme, were extremer/ high in 1925 and 1926, and profits, as the dividends of the rubber companies showed, (the shares of which were very largely held in the British Empire) were enormous, it is no exaggeration fo say that Great Britain paid



her share of the War Debt service in rubber profits, and even must have saved a good deal. If it had not been for the breakdown of the Stevenson scheme, the probability is that the world-crisis would have been postponed, and that Great Britain could have remained on the Gold Standard for some more years. Of course the overproduction of autocars in the United States, and the use of „reclaimed rubber" which began after the great rise in the price of rubber, would have been bound to have a detrimental effect sooner or later, besides which, with a view to the enormous profits on rubber growing, the output would have been bound to have increased. It may indeed be asserted, that the Rubberboom pulled Great Britain through some difficult years, and the world as well. For not only did the large output of rubber stimulate imports into the East, but the enormous increase of auto-trafftc in the United States and the rest of the world increased the world's material wealth, and thus helped for a time to absorb much of the increased production of raw materials and manufactured aticles. The auto-industry by itself, expanding as it did in the United States and in all the large countries, absorbed no end of all kinds of materials, besides petrol, which could hardly be produced in sufficiënt quantities, and rubber. Moreover, the autocar and autotruck traffic increased the speed of commercial transactions to an unheard of extent, as it is still doing. The Rubber boom had indeed the same effect, and indeed a better effect, than if new Transvaal goldfields had been discovered as * in the 'nineties of the preceding century, which also for a time averted the evil effects of the shortage of gold, causing prices to rise.
The main aspect of the increased output and use of rubber ia that this amazing material is not wealth in itself alone, but is the greatest creator of wealth, besides steam and electricity, known in modern times.
The world is so well equipped to produce all that is necessary for the prosperity and well-being of all mankind.



and in a degree unknown in history, and unknown even such a short time ago as 1914, that there can be no reason to despair. The monetary organisation of as many civilised states as can be grouped together for the purpose of alleviating the shortage of gold, and for regulating production of raw materials as much as possible, should pull the world through the present crisis.
Most of the following chapters will be devoted to the Silver Problem, to its part in precipitating the world-crisis, and to the necessity of once more admitting the white metal into the monetary systems of the world.
5



CHAPTER Vffl
THE ANGLO-AMERICAN WAR DEBTS CONTROVERSY
The preceding chapters had already been written when in December 1932 an exchange of notes took place between the British and American Governments.
Owing to the disastrous decline of prices of all commodities, which the author of the present treatise attributes chiefly to the mismanagement of the Silver Problem, the Debts question has reached an acute stage.
As long as prices of commodities stood at a high level, the service of the War Debts, as has been shown in the preceding chapters, was a comparatively easy matter. But the collapse of commodity-prices has indeed altered the situation. In the case of specific duties the percentage of duty on a given commodity has risen to a very high level now that prices have been generally halved. Whereas up to the end of 1930 and even in 1931 the amount of goods imported by the War Debts countries into the United States greatly exceeded the amounts required for the service of the War Debts, the suplus being much increased by such items as tourist expenditure in American countries and emigrant remittances, such is not the case in 1932, when the value of exports of the War Debt countries of commodities into the United States has so much fallen.
The War Debts problem has now become a matter of controversy mainly between the American and British Governments, since the latter have shouldered by far the largest part of the War Debts, and owing to their extremely open-handed treatment of Great Britain s former companions



in arms have an undeniable claim to be heard by the American Government especially from a moral point of view.
From a practical point of view, however, there is a wide divergence of opinions between the two Governments, as may be seen from a study of the notes of the lst. and 2nd., and of the 8th. and llth. December and of President Hoovers's Message to Congress of December 19th. In the main the difference between the American and the British points of view may be reduced to a few points, as may be gathered from the texts of the Notes.
Whereas the British Government held that ..the causes of the depression may be manifold", but that „it has been generally recognized that the War Debts and reparations have been one of the major causes" they also say: „The creditors, in so far as they have refused to accept payments in goods 1) have compelled their debtors to pay in gold. This has led to a drain on the gold reserves of many countries and this in turn has forced up the price of gold in terms of gold currencies. This process has brought about the present calamitous fall in prices and has therefore caused widespread ruin to producers in debtor and creditor countries alike and threatens disastrous social and political repercussions. It has seriously increased the burden of commercial debts; but it has rendered intolerable the peculiar burden of unproductive War Debts". In another paragraph the British note of the lst. December says that „the discharge of all international debts must in the long run take the form of a transfer of goods or services". (In passing, we may remark here that since precious metais, and particularly gold are not only a measure, but also a store of value which from the inception of the gold Standard after the 'seventies of the 19th century has been constandy used to adjust unfavourable balances of
') „In so far as they have refused to accept payments in goods" Is very different from saying that they have refused payment in goods altogether as the Chancellor said in Parliament (quoted in Chapter III), but then, an official document is very different from a political speech!



payment 'whenever the exchanges divulged their existence, gold has from the beginning been looked upon as a commodity and would therefore come under the heading of „goods" capable of being transferred. For this reason, as I pointed out in the first Chapter, a measure of value, which possesses value in itself, and thus may be looked upon as a store of value as well, is not an ideal measure. However, the world, as far back as recorded History may carry us, has used the precious metais in the twofold sense and will probably continue doing so for a very long time yet. It is this twofold use made of gold, of which the stocks did not prove adequate for an emergency, which has brought about the disastrous decline of prices, as soon as the total value of the two precious metais had been greatly reduced by the destruction of the gold value of silver).
The President of the United States replied to this, in (er aha, that whilst the British Government dealt with only a few items of payment, „the expenditure of American tourists in foreign lands during the period 1924 to 1930 has to talled approximately $3.900.000.000 (£780.000.000 at par) and that during the period immigrant remittances have aggregated net $1.495.000.000 (£299.000.000 at par). This is in comparison to total receipts of $ 1.673.000.000 (£334.000.000 at par) on account of debt settlement during the same period. Again, in measuring the transfer question, account must be taken not only of trade directly with the United States of America, but of the whole area of international dealings. In the total of receipts and outgo arising from international transactions of both our debtors and ourselves, debt payments have been a relatively minor item 1). The argument that payment of these debts to the United States of America has drained the gold reserves of other countries to the United States of America does not seem to us borne out by actual experience. The gold holdings of the United States of
1) The italics are mine.



America at the time these payments on debts began were about $ 4.028.000.000 (£805.600.000 at par) and they stand now at about $4.338.000.000 (£867.000.000 at par). The main fault in the distribution of the gold supplies seems to us to have occurred as between the different countries of Europe, as the gold supplies of Europe increased from about $ 3.018.000.000 (£603.600.000 at par) on January lst., 1924, to about $ 6.963.000.000 (£ 1.392.000.000 at par) at present; the distribution of which as between the countries of Europe cannot be attributed to forces originating in the United States of America."
In his Message to Congress the President shows other items on which he differs entirely from the British viewpoint. In warning against „separating cause from effect and symptom from disease" he thinks it „certain that the most urgent economie ef fort still before the world is the restoration of price levels" and although he believes that the gold Standard was „still the only practicable basis of international settlements and monetary stability" (which seems rather a bold statement in present circumstances) for the more advanced industrial nations, still he recommends a „larger use of silver" which „as a supplementary currency would be an aid to stability in many quarters in the world".
When we remember that but a short time before, the British Government in the House of Commons had given the cold shoulder to Bimetallism, even attributing the world's difficulties to it, which is no doubt an allusion to the coining of over 1500 million rupees in 1919 which were after 1926 demonetized again, it appears evident that Bimetallism in whatever form is another point upon which the two Governments differ very widely indeed. It almost seems that the Gold Standard and even Bimetallism and a reduction of the War Debts have become subjects of political barter, and that America might have Bimetallism in exchange for some very important concession in respect of the War Debts. Be this as it may, I think English readers will do well to study



the American point of view. What it is bound to be we have shown by producing American statistical evidence; and it will be of little use to continue telling the United States things which their sources of information. i. e. their own statistical returns prove to be either gross exaggerations, or not applicable to the pre-crisis state of affairs. In this respect President Hoover's warning as to „separating cause from effect and symptom from disease" is very significant, and so is his declaration in his Message to Congress that it seems „impossible to secure some method of monetary and exchange stability by the individual and separate action of different countries, each striving for separate defence" and that he therefore insists upon the usefulness of the coming World Economie Conference. This no doubt serves as a reply to those in England who would favour the permanent adoption of a Sterling Standard by as many countries as possible. But as Mr. Huntington-Wilson righdy remarks, this would reduce the problem to a struggle between a paper Standard *) and one or two standards based upon the precious metais. which are as yet quite indispenable to the proper working of world trade and industry.
Mr. Borah's speech in the Senate *) on January 4th. 1933 seems to confirm the above allusion to Bimetallism and War Debts having become the subjects of political barter. On that occasion he declared that Silver had been demonetized in the East in order to satisfy the „insatiable greed" of the few people who thought they could increase the purchasing power of the metal they possessed. He urged that it should be the work of an international conference to restore silver to its proper place, and if this failed he believed that the United States as an individual nation should either devaluate the
•) Owing tho the scarcity of gold, the gold Standard has actually been reduced to a paper Standard, of which in an emergency only a very small percentage would be redeemable in gold as shown by the March crisis in the aS.
2) Times, January 5th, 1933.



dollar or increase the monetary supply by a resort to silver - not necessarily in the ratio of 16 to 1 with gold, but in some marmer later on to be decided.
Senator Reed, of Pennsylvania, interrupted him to say: „You seem to think that Britain made a mis take in taking India off silver, and that the whole world suffers in consequence. Do you think there is a chance of Britain changing her mind?" „I am afraid I must accept the negative implication of the Senator's question" said Mr. Borah, but while this was so, while a debtor nation refused to consider what. in his opinion, would be so large a step towards recovery, he looked with less favour on the request for a revision of the obligation".
President Roosevelt has not said anything to justify attributing any leanings towards such a heresy as Bimetallism to him.
Perhaps American bimetallists would do well if they called Bimetallism by some other name, so as not to scandalize the worshippers of gold. They might e. g. call it the Gold Standard!



CHAPTER IX
THE TWO PRECIOUS METALS
It has become customary, since the adoption of the Gold Standard by the West, to deal with the East, monetarily speaking, as a quantité négligeable.
The production of gold and the calculation of gold stocks have been the subject of very exhaustive study. That study. as far as it goes possesses much scientific value. *)
The fact has been overlooked, however, that if we wish to form an idea of the röle of precious metal generally in the shaping of world-prices of commodities, we are obliged to take the two precious metais into account. The visible stocks of gold do not form the only basis which carries the trade of the world.
In China, with its population of about 450 miUion of souls, silver is the only measure of value to the population at large, and also the chief store of value. In India, with about 350 millions of souls, silver has been, since time immemorial, both the measure and the store of value to the masses, gold being hoarded chiefly by the rich. Some 40 years ago, by the closing of the Indian Mints against the free coinage of silver, the Indian currency system was for the first time in History detached from the white metal. None the less large hoards of silver were, and are still being held and even increased in India and in the East generally, as export statistics prove. *) They had accumulated there for ages, both in the shape of coin and as hoards of bullion held by Indian
') I here refer to the Report* of the Gold Delegation to the L. of N* *) During 1932 India has however taken much less silver than before, perhaps owing to reduced confidenee in the metal.



rulers, and in that of trinkets in possession of hundreds of millions of ryots (tillers of the soil). When crops failed or the family needs of the ryot required, it, these trinkets served as security against loans at their intrinsic value as precious metal. Obviously the decline of that intrinsic value has gready reduced the purchasing capacity of the ryot.
Thus, in China, India, and for that matter in Persia. Arabia, Irak and many other countries in Asia, Africa (where the silver Maria Theresia dollar is still popular) and in some countries of Central and South America silver is a very important precious metal to about half the human race, which carried on a huge. trade with the other half. With regard to Central and South America, inasmuch as they are producers of silver, these countries also suffer from loss of income due to the fall of the price of silver.
The importance of silver to world trade generally became very marked when after the war India had to be paid for goods and services in precious metal, for which only silver was then avaiable and wanted. As will be shown in Chapter XIII, this silver was coined in India and the gold value of silver rose to an unprecedented level. This was due to enormous amounts having to be coined in Europe for paying the armies and their requirements. Coinciding with the then prevailing scarcity of commodities the rise of silver resulted in the trade boom of 1920. Coinciding with the post-war surfeit of commodities, the decline of silver from 1921 onwards resulted in the present slump. The causal nexus between the position of silver and world trade is very obvious and it was wrong to treat silver, and with it about half the human race as a negligeable quantity. Western civilisation has now to suffer for this mistake by the pitiful plight of world trade.
The reader may reasonably ex peet some facts and figures in support of the above assertions, and as the author has a profound dislike of assertions not supported by incontrovertible evidence, this is adduced here.



What quantities of silver may be taken as extant in the above named countries and what was their value before the spectacular decline of the price of silver up to February, 1931, when the white metal feil to its then lowest record price of 1212 pence in London?
According to White the value of the silver exported from London to the East from 1833—-1916 amounted to £ 544.300.000. As his statistics end here, we have to -look elsewhere for further information. ' which we find on page 115 of the Report of the Directer of the Mint 1931. Figures for the years 1916—1918 are not given, but it is known that 200.000.000 oz. of silver were shipped in 1918 from the United States to India at one dollar per ounce. The figures on page 115 of the Report disclose the fact that the value of silver exported to the East during 1919—«1930 totalled £ 84.673.370, to which should be added the equivalent at par of the above 200.000.000 oz., thus bringing the total up to £ 126.340.000 and the grand total for the 98 years from 1833—1930 to £670.640.000.
Before 1833 however the East had absorbed large quantities of silver, only almost negligible amounts being produced in India. The large imports from the West began with the advent of the Portuguese in the East in the 16th century. They and the Spaniards shipped silver to the East in quantities which were large for that time and which were mined in their American colonies. That silver was the cause of the rise of direct trade with the East. From the disco very of America in 1492 up to 1600 the total output of silver is given on page 243 of the above named Report as 734.125.960 oz. The share taken by the East of this production is unknown and must be a matter of conjecture. As the East, and particularly India and China, were then in possession of manufacturing industries ■—> chiefly of textiles, carpets. porcelain etc. — whereas the West had little to offer
>) p. 173—157.



in exchange of these and of eastern spices except broadcloth and firearms, the discrepancy had to be met by shipments of silver. That this is so. is proved by copies of Invoices in the archives of the Dutch East India Company. We shall. therefore, probably be not far wrong if we estimate the share of the East at one third of the total. the two thirds remaining in Europe thus accounting for the phenomenal rise of prices of commodities in Europe in the 16th and 17th centuries. This one third would amount to about 240.000.000 ounces. In order, however. to avoid an over-statement, we may neglect these imports, allotting them to the wear and tear of coins, wastage etc
As from 1600 onward trade with the East constantly expanded, we cannot thus neglect the imports of silver from 1600—-1832. During that time the world production of silver, according to the Report, p. 242—243, totalled about 3.697.000.000 fine ounces. As trade with the East was growing, probably 40%, or say 1.478.800.000 ozs. worth £370.000.000 were sent to the East during those 232 years.
We shall, therefore, probably not be far wrong when we estimate the value of the silver extant in Asia before the crisis at about £1.040.000.000 and the weight at about 5300.000.000 fine ounces, which would be rather more than one third of the world output of silver since the discovery of America in 1492. The value of the Indian gold hoards, which are estimated at £ 500.000.000 before the crisis, (of which about £ 75.000.000 were shipped to Europe and America after September 21 st., 1931) and which amount to about 11% of the world production of gold since 1492 (Vide the tables on pp. 14 and 15) would appear to confirm my estimate of the silver stocks extant in the East, for silver has always been in demand there by the masses, more than gold.
The value of that silver, which the East has paid for it in the course of the centuries up to the crisis, say to the end of 1930, may be put. as calculated above. at £ 1.040.000.000 and the loss on it after the decline during the years



1928—1930- 31 at some £520.000.000. To that extent the East has been impoverished by the demonetization of silver in Europe and in India.
To that loss should be added the loss suffered by the silver-using countries in Central and South America, Africa etc which would bring the total for the world up to at least £ 600.000.00 or about $ 2.888.000.000 at par.
The world's stocks of monetary gold at the end of 1930 are estimated at § 11.756.000.000.
But in order to arrivé at the total value of the two precious metais operating as money (either in the shape of coin and bullion as in China and some native states in India and elesewhere in the East and Africa and America, or in the shape of hoards of bullion and of trinkets in India), the value of the silver should have been added. That value would bring the total up to $ 16.556.000.000. The loss, which we estimated at $2.888.000.000. is equivalent to more than 17%. Even one half of this would have been disastrous.
The value of the two operating metais, as expressed in the most precious one of the two cannot thus be reduced without disastrous results. Especially with a view to the enormous increase in the post-war output of all commodities Mr. Montagu Normans warning of 1926 was therefore based upon facts and figures as proved by statistical evidence and above all by the actual state of af fairs.
The mistake made by the gold m o n ometallists was that they reckoned with onl_y one half of the world. Owing to a strange error of judgment they behaved as if the other half existed in some other planet with which we had no dealings.
The reader may be inclined to think that I have been overstating my case. A few actual figures may however be adduced to support it.
>) P. 81. Report of the Gold Delegation 1932. 2) P. 256—257.



In India alone, e.g., according to White, during the 85 years from 1835—1919, 2.525.000.000 ounces of silver were coined. It is not known how much of this has disappeared from wear and tear of coins 1) and total loss. In this connection, however. I may point out that my estimate of 240.000.000 ounces for wear and tear up to 1600 is tantamount to taking it for granted that of all the silver extant in Asia in A. D. 1600 not a single ounce is left, which seems hardly possible.
According to the late Lord Brabourne's statement at the annual meeting of the Consolidated Goldfields of South Africa *) the remonetization of silver on a 20 to 1 basis had been calculated to increase India's savings by some £ 600.000.000 and those of China by an incalculable amount. This points to an estimate of 4.000.000.000 ozs. of silver for India alone.
Even if my estimate were exaggerated, however, and if the percentage decline were less than 17%, it would be serious enough. Now that the output of gold is on the increase, discount rates are low, credit is cheap, trade ought to revive. That it does not, is attributed on all hands to the War Debts and the Tariffs; but even their removal would not turn the impoverishment of the East into wealth, unless silver were rehabilitated.
The findings of the Commission for preparing the Agenda «of the World Economie Conference, in respect of silver, are extremely instructive.
„After keeping relatively stable from 1921 to 1929", the Report says, „the price of silver in gold currencies feil abrupdy by more that one half in less than three years. There is no doubt that this sudden decline must, in the main, be attributed to the same causes as have acted on the general level of prices and may thus be said to illustrate in a particular case the influence of the world depression".
Here we have a very striking instance of the lack of logic reasoning which is peculiar to the gold mentality, as it is to
*)• Perlaps 5°/o in every 50 years. 2) Economist Decmber 5th, 1931.



all fanatiscism, and owing to which cause and effect are hopelessly mixed up.
During 1921 — 1929 silver prices in London fluctuated as follows:
u. . • T Fluctuations in Percentages
riighest Lowest . ,. , , ,
or nighest and lowest
o/o
1921 43% 30'8 30—43
1922 37» g 3038 19—23
1923 33" 16 301, 10-14
1924 361,» 31-, 12S-14-,
1925 33716 31lls 7-71,
1926 31l«16 2Vie 24—32
1927 28 24% ll1,—13
1928 2878 26-16 10—10* 4
1929 26716 21' 14 19-24
During these 9 years the price declined, with fluctations of from 7 to 43%, from 43*8 to 215i«, that is to say by over 47%. That is what the Commission calls „keeping relatively stable"!
Expert opinion, however, is very different.
„In their annual bullion circular Messrs. Sharp and Wilkins summarize what they consider to be the chief reasons for the fall in silver from the pre-War price of 24d. to the present level of about 14d. per ounce. They state: — „For many years before the War the price of silver had remained in the neigbourhood of 24d., with moderate fluctuations of no great moment. The War caused an abnormal rise in the price of the metal, which in due course reacted and again settled around the old pre-War value. With the recurrence to normal conditions both India and China continued their habit of years and willingly and easily absorbed the world's production. Now, however arose important factors which were, ultimately, to bring about the debacle which faces the silver market of to day. The first blow to the price of silver may, we think, be placed to the credit, or otherwise, of our own Government, by their depreciation of our currency from the



fineness of .925 to that of .500. This caused a large amount of surplus silver to be placed for sale upon the market, approximately 70,000,000oz. having been disposed of since 1921, in addition to the requirements for foreign coinage orders undertaken by the London Mints. This silver was, in due course, absorbed by India, together with the world's production as before.
„Following the lead of our Government came Continental nations, who demonetized their currency and flung the silver upon the markets of the world. The manful way in which India and China stood up to this extra amount of „produetion", for it was little else than that, lasted for some time, eventually the purchasing power of these countries broke and the price had to fall. The Continental selling practically creased at about 19d., and at this level the market remained steady for a very long time, and is was then that the Indian Government decided to impose an import duty upon silver into India of about 20 per cent. The consequence was that the silver market could no longer stand the strain and finally succumbed to the inevitable. What, however, has probably contributed most in the past wo years to bring about the fall in silver from 24d. two the present level has been the selling of silver by the Indian Government. It was not so much the actual sales that were reponsible for the fall, as the uncertainty of their next move. The consequence has been that potential buyers have bought from hand to mouth, dreading that at any moment further sales might be made..."
Messrs. Sbarps and Wilkins are of the opinion that „conditions at the present time make it an absolute impossiblity for the Indian Government to sell silver to any extent. Any attempt to do so would force the price down still lower, just as every previous sale has done in the past." " 1).
The year 1930 is the first of the 3 years (after 1929). during which, according to the Commission, the price feil ') Times, January 15, 1931.



abruptly by more than one half. and „this sudden decline must be attributed in the main to the same causes as have acted on the general level of prices". As with Mr. Chamberlain's statement about the War Debt. this is disproved by statistical evidence, as the above record shows. The truth, in fact, is the other way round, in that silver was not acted upon by world prices, but owing to legislation, was on the contrary one of the most powerful causes of the decline of the general price level.
During the second of the 3 years. 1931, the price declined from 14T u in January, to 12d. in February. the Indian import Duty being increased again, and during the third of the 3 years, 1932. it feil to 12*td. in December (the equivalent in gold).
Now the general decline of the price level of commodities dates from the tremendous fall of silver prices during 1920 and 1921, which was due to demonetization, and it can be shown that during the following years declines of the silver prices were anterior to those of commodity prices.
That the decline of the prices of silver was indeed again and again anterior to the decline of world commodity prices is proved by the following figures, which are based upon data published by the Economist (Dr. Looyaard of Arnhem).
I London süver quotations I Index numbers of who|T I Reduced to lesale P**» of comI Averages | 1925 — 1QQ | modities. 1925 - 100
1925 32% 100 100
1926 28" u 89.3 92,9
1927 26*4 83,3 89.5
1928 26* „ 81.1 87,6
1929 24%„ 76.2 82,6
1930 17" lt 55.4 69.4
1929 January . . 26% 81.8 84,6
February . . 25% 80.7 85.4
March . . 26 I 81 85.8 April ... I 25% 80.2 83,9



London silver quotations inciex numbers of who» Reduced to lesale prices of comAverages i^s^iqq modities. 1925 = 100
1929 May ... 25%6 78,1 81,7
June ... 24% 75,6 81,9
July ... 24'16 75,7 83,7
August . . 24%„ 75,7 83,6
September . 231118 73,9 82
October . . 23%. 71,8 80,5
November . 221116 70,7 78,8
December . 22% 69,3 78,8
December 1930 . 16% 51,9 61.3
February 1931 12% 38,9 59.4
April 1931 13% 40,9 58,4
May 1931 12'%8 40.3 56,8
The Commission devotes the following superficial, incomplete and misleading remarks to the demonetisation of silver in Europe in 1920 and following years and after 1926 in India, without however mentioning each of them separately or in any detail:
„Some special factors can, however, be found which have accentuated the downward trend, and these were to some extent already operating before the depression set in. Such factors are: the demonetization of silver, the reduction of the silver roken coins and also the disposal of surplus stocks." Such half-truths are only exceeded as to their pernicious effect upon public ignorance of these matters. by the downright untruth of Mr. Chamberlain's assertion as to the payments against War Debts having been refused in commodities, which the Agenda Commission has also adopted.
Surely a system which needs such methods for its maintenance is in a very bad way indeed.
The Commission further deprecates Bimetallism, not indeed on its merits, but „on the assumption that no form of Bimetallism will prove acceptable". The Gold Standard, which has just proved itself to be hopelessly inadequate, is
6



held to be „the only internationaal monetary Standard which is at present likely to command universal acceptance".
How does the Commission know this, and why does it not recommend Bimetallism to be placed on the Agenda?
That would have saved the Commission the reproach which may now be levelled against it, for having framed a partisan Report and for having shown very little respect for the Conference, in attributing to it ready-made, foregone conclusions, based upon fallacies and half-truths.
This method, instead of strengthening the case of the Gold Standard, weakens it, for the Commission evidently fears a scientific and unbiassed discussion of Bimetallism.
I defy gold-standard worshippers to refute my facts and figures, not by mere assertions and threadbare phrases, but by equally reliable facts and figures.



BOOK n
SILVER
CHAPTER X
BIRD'S EYE VIEW OF THE HISTORY OF SILVER. THE RATIO BETWEEN SILVER AND GOLD. RATIO OF VALUE AND RATIO OF PRODUCTION
Having now shown, I think conclusively, that the scarcity of gold, coinciding with the enormous increase of the production of commodities after the World War, due to modern, mainly post-war scientific endeavour, is at the bottom of the present collapse of world trade, I now propose to deal with the other precious metal, silver.
The white metal had been, since the dawn of civilisation, up to the end of the Franco—German war some sixty years ago, the principal yardstick and store of value throughout the world, England alone excepted, where, after the victory of Waterloo, the single gold Standard had been adopted.
Thus, the record of silver is thousands of years older, as a Standard and store of value, than that of gold. According to Genesis 37:28 the Midianitic merchants sold Joseph for twenty pieces of silver, which were probably equal to about one shilling each. It appears very likely that the size and weight of silver coins, before they were reduced to token money, such as rupees, francs, shillings, marks, etc. were based upon a very old tradition in civilised countries. That tradition was no doubt due to motives of expediency, such as portability, and the ancient ratio of production between



silver and gold, a pound of gold then being worth twelve pounds of silver. Historie research has proved indeed that during about 2000 years before the discovery of America in 1492 that ratio had remained almost constant. The ratio has altered a good deal in favour of gold since then, but the most reliable statistic evidence proves that since that year only 14 ounces of silver have been produced for each ounce of gold (see Table on pages 14 6 15). One the other hand the aggregate production ratio from 1860 to 1930 is about 1212 ounces of silver for each ounce of gold. The ratio from 1860 to 1930 is about 121*. The ratio from 1860—1872 was only about 7 to 1; from 1873—1930: 12 to 1. In 1915: 7,6 to 1 and in 1930: 12 to 1.
The very great difference between the Ratio of Value and the Ratio of Production at different times is very remarkable. White says that the increased Ratio of Production in 1890, which was then 22 to 1, was out of all proportion to the use of silver for industrial purposes and caused legislation to be adopted to limit its use as currency. But then 1890 proved to have been the last year of low gold production, and despite the ostracism of silver for monetary purposes the ratio feil to less than half the 1890 ratio. Moreover, the latter ratio was brought about by legislation, viz. the demonetization of the 'seventies of the 19th century. If matters had been left as they were, i. e. if the two metais had been allowed free coinage. the likelihood is that the Ratio of Value would have remained much what it had been for so many ages. Silver nowadays is mosdy a by-product of copper and lead, but gold and silver are often found together and scientific progress in the working of ores often applies to both. Hence there is also a connection between the production of the two metais.
The use of silver, in fact, has been artificially interfered with by legislation, as is confirmed by statistical proof. Any discussion which left this point out of consideration would be incomplete and therefore inefficiënt.



Ratios of Silver to Gold
i.e. ounces of silver to 1 ounce of gold.
v Ratio of Ratio of Ratio of Ratio of
Years Production Value Production Value
1921-1830 32,40 15,77 1901 13,70 34,68
1831—1840 29.30 15.75 1902 11,00 39,15
1841—1850 14,25 15,73 1903 10.50 38,10
1851—1860 4,00 1536 1904 9,80 35,70
1861—1870 6.40 15,48 1905 9,40 30,87
1871—1873 5.66 15,53 1906 9,40 30,54
1874 12.50 16,16 1907 9.20 31.24
1875 13.20 16,64 1908 9.50 38,64
1876 13.50 17,75 1909 9.60 39.74
1877 11,40 17.20 1910 10.00 38.22
1878 12.70 17,92 1911 10.00 38,33
1879 14,00 18,39 1912 10.20 33,62
1880 1430 18,05 1913 9,40 34,19
1881 15.90 18.25 1914 8.10 37,37
1882 17.50 18,20 1915 7,50 39,48
1883 19.30 18,64 1916 8.20 30.11
1884 16.40 18,61 1917 9.10 23.09
1885 17,40 19,41 1918 10.90 19,84
1886 16.20 20.78 1919 10.00 16.53
1887 18.20 21,10 1920 10.70 15,31
1888 20,40 22.00 1921 10.70 25.60
1889 20.00 22,10 1922 13,60 27,41
1890 21.90 19.75 1923 13.80 29,52
1891 21,70 20.92 1924 12.50 27.76
1892 21,60 23,72 1925 12,90 29,38
1893 21,70 26,49 1926 13,00 32,85
1894 18,80 32.56 1927 13,00 36,22
1895 17,40 31,60 1928 13.00 35,26
1896 16.00 30,59 1929 13,30 3832
1897 14,00 34,20 1930 12,30 53,83
1898 12.00 35,03 1931 9.75 80,00
1899 11,30 34,36 . 1932 i) 7,00 i) 85,00 1)
1900 14,00 33,33 |
As will be seen from this table, the Ratio of Production has not f luctuated to anything like the same extent as the Ratio of Value. This proves that the production of silver, as is often stated, cannot have affected its value by a long way so much as other factors, the chief one of which was legislation.
Prior to 1873, when Germany had adopted the single gold Standard, the Ratio of Production varied a good deal, but the
') Estimated.



Ratio of Value was fairly stable, as legislation in the world outside Great Britain had not then interfered with the use made of silver for coinage. As Bimetallism was then universal outside Great Britain, the value of silver rose and feil naturally with its output. Except in the 16th and earlier 17th centuries, when the first great discoveries were made in America, the fluctuations were not considerable.
During the 16th century, owing to the enormous increase in the output of silver, the ratio of value began to change in favour of gold, as the silver mines of Peru and Mexico were developed more and more by the Spaniards. As the table shows, the production, which from 1492—1520 had averaged 1.511.050 ounces annually, rose to 2.899.930 ounces annually from 1521 — 1544, to 10.017.940 annually from 1545—1560 and to 13.467.635 from 1581 — 1600. Thus, a constantly increasing stream of silver entered Europe, and via Europe it reached Asia, Africa, and the East generally. and there is no doubt that the rise of trade with the East, especially in the 17th century was enormously stimulated by the increased quantities of available silver. The present Persian monetary unit, the riyal, is named after the riyals which the European merchants, especially the Dutch, imported into Persia in the shape of the famous „pieces of eight" of which the American dollar is the lineal descendant.
Already during the latter half of the sixteenth century prices of commodities began to rise owing to the increased quantities of silver being coined. As the system of fiat money or f iduciary paper currency and credit was but little developed in those days. the rise of prices, which then created such a stir, may be called silver-inflation in this sense, however, that it was genuine, and in promoting trade increased the world's stocks of goods and its material wealth. There is this tremendous difference between inflation by the increase of the precious metais and inflation by the use of irredeemable paper, that the metais are valuable commodities in themselves, whereas paper has no value whatever.



The recurring disturbances of the monetary systems due to the almost incessant state of war between vafious countries caused equally constantly recurring debasement of currencies. War was expensive, wages and the pay of soldiers rose, and so these were paid in coins containing less silver than before, but bearing the same name. As soon' as this became apparent, however. prices rose again. and so on from century to century, until, when the World War broke out, the general level of prices was about five times as high as in the 17th century. despite the greatly increased production of commodities, both actual and per capita of the populations.
The ratio between silver and gold as stated above had been 12 to 1 for thousands of years before the discovery of America. But owing to the increasing output of silver it gradually changed in favour of gold. One of the oldest official documents which record the change is the Ordinance of Leycester, who in the time of Queen Elisabeth governed the Netherlands for some years. The Ordinance, which appeared in 1586 says that „the proportion between gold and silver has gradually altered, the estimation of gold having risen more than that of silver". This document is of much interest in respect of the History of Economics, as it marks the inception of a development which has continued up to our time. After the 16th century the ratio altered further in favour of gold as the table shows, but during some centuries, up to the French Revolution, it remained fairly stable at 15 to 1. During the following years it increased somewhat until it remained fairly stable at about 151 a to 1 under the steadying influence of the La tin Union. In our time, owing to unprecedented government interference and ill-advised measures, the ratio has fluctuated from 15 to 1 to 85 to 1. The root-cause of world trade disturbance, therefore is not far to seek.
> ) White, p. 310.



CHAPTER XI
BIMETALLISM. THE LATIN UNION
The La tin Union was established in 1865 between France, Belgium, Switzerland and Italy says Pierson 1).
The French currency of 1803 was to serve as a basis, subject to the proviso that all silver coins below the five franc piece were to rank as divisionary money. The coins of the one country were not to be declared legal tender in the other countries, but were to be accepted by the Exchequer in the respective countries sothat they should become virtuaüy current there. Each of the signatory States should be free to coin divisionary money up to the limit of 6 francs per head of its population, and such money should be legal tender for any sum up to 50 francs. Spain did not belong to this Union but in 1868 she regulated her coinage on the same basis as that of the Union.
..The system of the doublé Standard was not maintained for long by the Lation Union. On January 31st„ 1874, the signatory states agreed that the coinage of large silver money should be entirely forbidden within the Union. The agreement of 1874 and more definitely that of 1878 involved the abandonment of the doublé Standard, a measure which had been adopted in England as early as 1798. There too the doublé Standard had been in operation and silver had been supplanted by gold. As soon as there was a danger of silver being supplanted by gold, England like the Latin Union, adopted means to prevent it." *)
Unfortunately, as already pointed out in the Chapter on gold. the adoption of the Gold Standard by Germany in
') Prmciples of Economics by Dr. N. G. Pierson.



1872 and the relinquishment of Bimetallism by the Latin Union in the later 'seventies of the 19th century coincided with the declining output of gold, which had then not yet been much in demand, and the result was a prolonged depression and falling prices, which lasted until 1890 when South Africa saved the situation.
The relinquishment of Bimetallism was not due to any severe slump as in our time. Gold was the fashion, and won the day. The world is very much given to mass-movements, as it always has been, and these are often stronger than logic. The gold-monometallists urged the danger of silverinflation. But they themselves have been doing nothing else but creating a gold-inflation, which led to the catastrophe of the present time. It is interesting, in this connection, to recall the impression which the enormous increase in the output of gold from 1850 to 1870 made upon economists of those days, such as Pierson, who wrote in 1896: „Could anything else be now expected but a strong decline of gold as compared with silver? The present generation can hardly imagine that shortly after the middle of the 19th century gold created as much anxiety as is the case now with silver in those countries whose currency chiefly conists of the white metal."
„Silver", says White 1) „had been dealt a heavy blow and succeeding years reccorded defections on the part of one country after another from their allegiance to silver as co-regnant with gold.
„The United States of America, whose prosperity became in course of time allied closely with silver mining, sought to stem the tide of disaf fection by under taking to coin annually a large number of silver dollars."
Under the Bland-bill of 1878 it was declared the duty of the Government to cause to be coined every month not less than two million and not more than four millions of dollars
>) Page 283.



silver. An International Conference was to be held to bring about the international adoption of the doublé Standard on a uniform basis.
Three such Conferences were held, the last of which was that of Brussels in 1892, which may well be called the funeral of Bimetallism, for its results were negative. Mr. Darling, who is a banker of wide experience, after having pointed to Germany's action in 1873 declares that England is not by any means free from responsibüity for that failure „for in the heyday of her prosperity and the intoxication of her self-sufficiency she refused to join with the other nations in 1878 to rehabilitate silver. In consequence, silver, which until 1873 was worth about 60d an ounce, now stands about 16d. (This was written in 1930; the low record of that year was passed by that of February, 1931, when the price feil to 12'sd). Even when we returned to the Gold Standard, in 1925, silver has fallen 50 percent, and has lost one third of it value during the past twelve months". *)
Still, in the United States, under the Sherman Act of 1890 the amount of silver which would be purchased annually by the Government had been placed at 54.000.000 ounces or nearly three times the minimum of 1878. „The total purchases of silver by the United States Government under the Bland Bill and the Sherman Act (which was recalled in 1893) amounted to 429.000.000 ounces. The silver production of the whole world for the years 1878 to 1893 is estimated at 1.704.000.000 ounces, sothat the effect of the Bland and Sherman Acts was to create an artificial demand for just one fourth of this production." 2)
Was this, however, an „artificial" demand? The demonetization of silver by the La tin Union, which was the cause of all the trouble, was prompted by no other motive than that of the fashion of the day in favour of gold, and could be called „artificial" for far better reasons. We
') The Rex. page 16. *) Pierson, quoted by White, p. 285.



may search the monetary history of that time for any other motive, but we shall not find it. Absurd as the action of the La tin Union was, still the United States were mistaken in adopting a measure without having first secured international cooperation, which events have proved to be absolutely indispensible in problems of currency. The outcome was what was looked upon as an excess of silver money in the United States; under the inexhorable action of the Gresham Law gold was exported and a monetary panic ensued, the price of silver in London falling from an average of 40d in 1892 to 30Sd. The Sherman Act was repealed on October lst., 1893 which caused a further collapse of silver to the low record of 27d in1894. In 1902 a fresh low record was established at 20* td, which was not beat en until that of February, 1931 at about 12*sd. England was then still on gold.
The increased production of silver in the latter half of the 19th century in Nevada, Idaho, Utah, Arizona, Colorado and other States of the Union, 27 of which now produce gold and especially silver, had a psychological effect, the more so as the output in Canada, Australia and Mexico also increased greatly as the table on page' shows. Forty years ago the trade of the world amounted to much less than one fourth of the 1929 total, hence it could not absorb the additional production of one of the two precious metais, which frightened the world into hasty measures resulting in the impoverishment of half the human race.
The output of silver has deel in ed since the crisis broke out *). The two base metais produced together with silver in a majority of cases having been in less demand, the production of silver is not by far so profitable as before. The price of silver, moreover, is artificially depressed by the stocks held over the market by the Indian Government.
') The 1931 output of Silver is estimated at about 192.000.000 oz.; the 1932 output at only about 160.000.000 oz. {Annual bullion review of Messrs. Mocatta and Goldsmid).



CHAPTER XII
THE UNITED STATES AND SILVER. THE POSTWAR DEMONETIZATION AND DEBASEMENT OF SILVER TOKEN MONEY. Mr. RENÉ LÉON's PLAN FOR BIMETALLISM
The large production of silver in 27 states of the Union naturally causes much interest to be taken in silver in the United States. The silver interests there indeed dispose of a good deal of political influence, to which we have to attribute the recent frequent allssions to silver. especially in President Hoover's reply to the British Government's note on the War Debts. When the American Government was invited to the World Economie Conference, which will probably be held in London in 1933, this was accepted on condition that the Silver Problem would be placed on the programme. In recent election speeches too we find many allusions to it.
A most interesting study was recendy devoted to silver and to the currency problem generally by Mr. F. M. HuntingtonWilson. tonner Under-Secretary of State *). This author trnly says that the appropriateness of the ratio between silver and gold is of the essence of the problem, and he gives the plan communicated to him by one of the American experts on currency matters, Mr. René Léon, who recommends action as to Bimetallism to be taken by the principal countries of the world, the chief features of the plan being:
M A plan for Recovery. Money and the Price Level, the Century Co., New York-London, September 1932.



1. Resumé or continue coinage of silver at 0,900 for large and 0,800 for small coins, replacing with them all paper or other currency below $ 0,50 or the equivalent thereof.
2. The United States, Great Britain, France and Germany agree to maintain 96% of their metallic reserve in gold and 4% in silver, if the latter be available at $ 0,50 per ounce or the governments concerned can be persuaded that they will and to be divided pro rata.
3. All other occidental countries to be invited to the same *).
The plan is admirably simple and may prove workable if the governments concerned can be persuaded that they will far more than fully recoup the extra cost of undoing their demonetization of silver by the revival of world trade resulting from the anticipated rise of silver and increase of the purchasing capacity of half the human race. It will of course be difficult so to persuade them as long as it is believed that the world depression is mainly due to the United States having refused to accept goods and services in payment of the War Debts.
Another advocate of the remonetization of silver is the Hon. Andrew L. Somers of New York, who in a very noteworthy speech in the American House of Representatives on February 8th, 1932 brought the problem nearly up to date and showed its great importance. As it appears to me indispensable for a study of the subject, I may be excused for having to some considerable ex tent made use of it for the following remarks, the more so as they tally with other data.
During the World War the belligerent Powers were obliged to draw on the Oriënt for vast quantities of men and materials, and hence India and China became their creditors for huge sums. As they did not posses the economie machinery to make postponement of payment possible by bonds issues
>) Vide also p. 131.



or bank credits, and as European industry was entirely dislocated by the war, these debts could only be setded by precious metais. As gold was scarce and was much needed as the foundation stone of the waning credit of the belligerents, shipments of silver were the only alternative. (It may here be remarked, in passing, that nothing is more apt to prove the truth of the saying that gold is essentially a fair-weather Standard, Bimetallism having had to be resorted to by England which had inaugurated the Gold Standard in 1816 and departed from it as soon as the World War broke out).
Europe was soon denuded of its stocks of the white metal and after the war prices, as the table shows, reached unprecedented levels, even when the depreciation of sterling at that time is taken into account. As the United States were the only holders of immediately available stocks, the British Government puchased about 200.000.000 ounces of silver from the United States at one dollar per ounce, and under the Pitman Act the United States accepted the bond of the British Government in payment. These large stocks of silver were now shipped to British India; the bullion silver value of the Rupee reaches its nominal value of 16 pence when silver sells at $0.864 per ounce fine. *) This price having been exceeded in 1917, the silver value of the Rupee was higher than its sterling value. The result was, that the Rupee note issue, being considerably in excess of the stocks of silver in the Indian Treasury, the Government had to buy silver at almost any cast. Hence the above transaction. Although all the 200.000.000 ounces were minted into Rupees, the price of silver still rose further, until in Europe silver token coins (also called fiduciary coins) were melted down and exported under the action of the Gresham Law, which takes its name from a famous economist who discovered that when one of the two metais appreciates in value more than the other, the
•) This is about the price which the United States had paid for them under the Sherman Act of 1890—1893.



depreciated metal drives out the other. In order to prevent the exporting of silver coin. England melted down her silver money in 1920, debasing it from 0,925 to 0,50 fine. As however, silver declined before the end of 1920, this measure was not at all necessary, still it was carried out and the decline of silver, which had already commenced in 1920, was accelerated by the sale of the demonetized silver which aggregated some 70.000.000 ounces. *) As England had been coining silver on a large scale during the war, the total reaching £26.000.000 in 1918 2) and about 1.500.000.000 Rupees were coined in British India in 1919 and 1920 my above statement that Great Britain had returned to Bimetallism is founded on facts. Nor can it be denied that the trade boom of 1920 coincided with that return to Bimetallism, turning into a collapse when silver was again demonetized. Again, the tremendous demonetization of silver in India after 1926—1927 preceded the World Collapse of our time. It is impossible to deny the coincidences nor the causal nexus which af ford one of the strongest arguments in favour of a return to Bimetallism. But this by the way.
The debasement of silver by England was bad enough, but worse was to come behind, for England's example was f ollowed by all European countries. Holland only debased her silver token coins to 0,72, with a view no doubt to her Indian Possessions and to other considerations.
When, a few months ago, I suggested the coinage of a considerable amount of silver token coin both on account of the profit and in order to help exports by that expediënt, this was received with pious indignation by the worshippers of the gold Standard. Yet later on they recommended the demonetization of the debased silver coins and the replacement by nickel coins of no value at all. Fortunately this proposal was shelved on the advice of two leading bankers.
') Report of the Direetor of the Mint 1931. p. 122. 2) Bric. Brit. 13th. Ed. New Vols, p. 672.



Up to the years 1929 no less than 31 countries debased or demonetized their silver currency. The silver derived from these operations from 1920 to 1930 is estimated at over 400.000.000 ounces. Of course the sale of these large quantities of silver had the same effect upon the silver market as if new silver mines had been discovered and worked. During the above named decade the price of silver continued its decline. But again. worse is to come behind. For to these quantities were added the enormous proceeds of the demonetization of Rupees in India. After the closing of the Indian Mints against the free coinage of silver in 1893. up to the outbreak of the World War, the Exchange rate of the Rupee had been kept steady at 16 pence since 1898 and India may be said to have been „kept" on the Sterling Exchange Standard, as there was no statutory obligation on the part of the Government to do so. The Fowler Commission of 1898 had recommended the real Gold Standard for India, with «gold coin actually in circulation as was indeed the case in the „golden" pre-war days throughout Europe and the United States, when the cashier at the bank would say: „How will you take it, Sir, in gold or in notes?" In 1913 however, another Royal Commission presided by Mr. Chamberlain, concluded that gold in circulation was not expediënt, and that the Gold Exchange Standard would meet India's requirements. The Chamberlain plan however was interrupted by the monetary occurrences due to the World War as described above.
In 1925 Great Britain returned to the Gold Standard. Under the infuence of the Rubber boom *) that country had become ,,ripe for the gold Standard" as Bismarck had said óf Germany after her victorious war, in 1873.
«) Vide Chapter VIL



CHAPTER XIII
THE INDIAN CURRENCY PROBLEM
The Hilton Young Commission which took evidence during the year 1926 on the Indian Currency Problem recommended what has become known as the Gold Bullion Standard. Under this system a minimum of 400 ounces of gold (say about £ 1700 at par) might be obtained from the Treasury but not for non-monetary purposes. As this system implies gold reserves, there were to be partially created through the sale by the Indian Treasury of its stock of silver Rupees, consisting of several hundred million ounces. „This", says Mr. Somers in his speech quoted above „laid the basis for the great monetary dislocation which we are witnessing to day because it superinduced flight of capital".
In his well-known pamhlet The Rex Mr. J. F. Darling says on this aspect of the Problem: „It was because of the depreciation of silver which followed the breaking of the bi-metallic tie that India was compelled to close her mints in 1893. She did so after the most strenuous efforts to induce the nation to agree to rehabilitate silver. But England blocked the way. Indeed at the Brussels Monetary Conference of 1878 the British Commissoners were permitted to attend provided only that the question to be submitted to the Conference was not an open one so far as England was concerned.
„Including the Committee on whose Report the Mints weie closed, no fewer than five Commissions or Committees have sat at various times endeavouring to solve the Indian Currency Problem. The latest attempt was that of the Hilton Young Commission. The Report of this body, dated July,
7



1926, said: „,The people of India have from time immemorial placed their trust in silver as their medium of exchange and their store of value. They are deeply interested in the value of silver bullion and it is contrary to their interests to depreciate it. The present proposals (those of Indian Government officials) would inflict heavy losses on the poorer clases, who have put their savings in silver ornaments and who would find their stores of value depreciated by perhaps 50 per cent, by the action of Government.'"
„As I ventured to point out at the time", Mr. Darling continues, „the Commissioners' Report was not logical, for it recommended a course of action that was most likely to bring a result which itself had deprecated".
According; to the Simon Report the Indian ryot used to have to pay 3712 per cent. on loans from usurers. Fortunately this rate, under the beneficial infüence of the co-operative movement is much reduced. The Indian peasant, however, had not much besides silver ornaments in which from time immemorial he has invested his savings to offer as security. Obviously, with the fall of the value of silver the value of such security has been reduced to about one fourth of what it used to be before the destructive abandonment of Bimetallism.
As we have already remarked, the debasement of silver by the nations of Europe proved to be unnecessary, because, before the necessary legislation had been adopted by them, the price of silver had fallen and token coins were no longer melted down and exported. The purpose of the debasement of course was, to obtain more profit from the coinage of silver money in order to provide amongst other things, for the increasing expenditure on social measures under the pressure of the various political parties, which outvied each other to obtain the support of the masses.
Thus, neither in Europe, nor in India the debasement and demonetization of silver was necessary. Again, as in the 'seventies of the 19th century it was the „gold mentality"



which is a kind of snobism, that won the day. Had those countries listened to the advice of those who opposed these measures, the World Collapse would certainly not have assumed. its present aspect.
In vain Sir Montagu Norman, Governor and Sir Charles Addis, Director of the Bank of England, than whom no better practical financial experts could have been found, had warned the Hilton Young Commission in their joint evidence.
Within four years their prediction came true to more than its f uil est extent.
Not only did the world demonetization of silver, which was wholly uncalled for, depress the silver market, but it accentuated the scramble for gold and/or Gold Exchanges.



CHAPTER XIV
INDIA AND THE GOLD STANDARD. INDIAN AND CHINESE LOSSES ON SILVER OVER £500.000.000 (AT GOLD PAR)
India could not be provided with sufficiënt gold to be put into circulation. The withdrawal of gold coins from circulation in Europe. as initiated in 1922 at Genoa, had already proved its scarcity. India would have added another large-scale scrambler for gold to the rest, and as it was. she always imported large quantities of gold since many years. as her trade balance used to be in her favour l). The Indian requirements of gold to be put into circulation were variously estimated at £ 103.000.000 and even at £ 173.000.000 by Professor Cassel. Mr. Pierpont Morgan, in his evidence before the Hilton Young Commission declared that a gold loan in the United States would meet with serious opposition.
Mr. Benjamin Strong. Governor of the Federal Reserve Bank of New York in his evidence said it was doubtful whether gold circulating in India, would be aways available in case the exchange situation required gold exports. In view of the gold-hoarding habits of India, he had sound reasons for that statement.
And so the real Gold Standard for India was ruled out. It had been insisted upon by many native Indian politicians and financiers in their evidence before the Commission. Nor is this surprising. India had seen her silver depreciated which had been handed over to her in payment of goods and services, when England had been obliged to have recourse
') See also Chapter IX.



to Bimetallism in 1919 and 1920, but now she got very little in lieu of her silver, which after all was a tangible asset as long, especially, as it was not gratuitously abandoned by the West.
Moreover, India's hoards of silver were, and still are, very large. This of course also applies to China and many other countries in Asia, Africa, South America and elsewhere especially in Europe and the United States where silver is largely used for many purposes, such as silver plate etc - According to White the value of the exports of silver to the East, from. 1833-1916, totaüed no less than £544324333. When we add to this half the world's output of silver, which is the average share of Asia, from 1916 up to the end of 1930, we shall find that the loss to the Asiatric countries alone on silver amounts to about £500.000.000.
Some learned economists have pooh-poohed the contention that silver-using countries lose purchasing power by the decline of silver. Prof. Cassel has declared that they pay for their imports not with silver, but with commodities, and since they habitually export more than they import, they invested the surplus in silver and gold. Quite so. Other nations invest their savings in other ways, but when by far the larger part of these declined to one fourth of their previous value, could it be held that they had not lost an enormous part of their purchasing capacity?
The Indian peasant, who has placed much of his savings in silver ornaments, finds that he can borrow much less Rupees against these than before. The wholsale jettison of silver all over the world which followed England's ill-judged example, could not fail to add additional demand for gold or gold exchange, both from India and China. This explains the „interaction between gold and silver prices'" to which Sir Montagu Norman and Sir Charles Addis referred.
As Mr. Somers truly says in his speech, the sales of silver from its debasement and/or demonetization all over the world (except indeed in the United States), acted as a daily



depressant upon silver prices. In addition thereto, when in 1926 the Indian Government decided to sell their stocks of silver they automatically served notice on the world that the most important of all factors was entering the silver market as an active and formidable seller. The flight of capital to which this authority refers, through the metais and the exchanges, began in China in 1926 and is still continuing in 1933. The Chinese as he says, could not remove their capital from the country and rem ai n in business. They insured themselves against the possible further destruction of their money by „cover" operations. that is they purchased gold and/or gold exchange. These „cover"" operations are tantamount to sales of silver and had the doublé effect of disrupting the silver market as well as the gold and gold exchange market. Obviously. capital in flight primarily seeks security and liquidity and not investment and is subject to sudden withdrawal, which explains the general phenomenon of the shipping of gold to and from America backwards and forwards of late years. as confidence rises or falls. The same applies to India where the savings of the people are still invested in silver, despite the import duty on the white metal. Wealthy Indians, says Mr. Somers. followed the example of the Chinese in order to insure their silver hoards against the destruction of their values. The amounts he thinks must be gigantic.
They took out „insurance" by „cover" operations as the Chinese did.
Thus the two largest consumers of silver in Asia, who together form more than one third of the population of the world (to be prerise: 440.000.000 Chinese and 348.000.000.000 Indians, together 792.000.000 or roughly 40 per cent. of the population of the world according to the Statistical Year Book of the League of Nations 1930— 1931) have become sellers. 'When we add to this the inhabitants of Abyssinia, Persia, Arabia and several



countries in Africa and South America, together with the silver-producing countries, we shall find that more than half the world's population is interested in silver and in its vidssitudes. As it is difftcult to put the situation in a dearer way, I may be excused from here quoting Mr. Somers verbally: „Monetarily speaking. custom and tradition divide both halves of the world, sothat if we wish successfully to deal with one another, it is imperative we should recognize and respect one another's money and not inflict our own monetary standards upon those who are unwilling to accept them and who. are unprepared for them. Least of all should we perpetuate such measures in the alteration of our monetary systems as tend to disrupt and destroy the moneys and savings of the peoples of the Eastern world."
Indeed, the confidence of the chief consumers of silver in the East has been shattered by the vacillations of the West. England, from 1816 an enthusiastic gold-monometallist country, abandoned gold. as did the other European countries, in 1914, took to Bimetallism during the war especially from 1918—1920, jettisoned silver in 1921, returned to gold again in 1925, jettisoned silver in India in 1926 and relinquished the Gold Standard once more in 1931.
The wholesale jettison of silver all over the world and be it noted not from an innate aversion to the white metal but from legislative whims, and the desire of the West to gain extra profits from token money irrespective of the consequences to half mankind in Asia, could not fail to shatter confidence in silver *). It was bound to cause additional demand for gold and/or gold exchange, an aspect of the problem which is but very little known, let alone understood generally. It explains the „interaction between gold and silver prices" to which the two Bank of England experts dted above referred.
') Toward the end of 1932, however, It appears that purchases of silver were effected owing to its cheapness, in exchange for gold.



Thus this extra demand added gready to the already existing scarcity of gold, and hastened the gold crisis in England in September 1931. Moreover, it showed better than anything else. that neither the West nor the East are ripe for an a-metallic Standard such as recommended by Mr. Stanley Jevons and his supporters.



CHAPTER XV
INDIA'S GOLD HOARDINGS. BIMETALLISM FOR INDIA. THE CHIEF SILVERf PRODUCING COUNTRIES
As remarked above, India has aways been a large import er of gold, particularly for hoarding. That is why Mr. Benjamin Strong doubted wether gold would be available in case the exchange rate required it. But these gold hoardings, since the Rupee is on „Sterling Exchange", have become worth more Rupees than when they were purchased, and so that gold is being largely shipped to the West. This gladdened the hearts of many gold-worshippers, for they pointed to the supplies from Asia to make up for deficiencies. But whilst India, before September, 1931, owing to the gold exchange and gold bullion standards, had to join the scramble for these which ruined world trade, she will have to join the scramble again, if the world should be unfortunate enough to be again saddled with the ill-fated Gold Standard.
From the wavering policy of her successive governments India now remains with depreciated silver and she is gradually losing a part of her gold savings as well, for the total shipments of gold from India after September 21, 1931, were already in October, 1932. estimated at £63.000.000. Thus the monetary vicissitudes of India can hardly have failed to contribute to political disaffection.
Another banker, of much practical Indian experience, Mr. E. J. Bunbury, President of the Local Board at Bombay of the Imperial Bank of India, in August, 1931, declared that Bimetallism, which to the gold-monometalists appears to be heresy, would be possible if the necessary cooperation could



be established between the three or four countries which have a vital interest in silver, and would add a great deal to the purchasing power of India and China. I trust that the thoughtful reader will attach more importance to the opinion of a practical banker than to that of Professor Cassel, however well he may be versed in the theory of Economie Science.
The three or four countries to which Mr. Bunbury alluded are Mexico, the United States, Canada and Peru, as the following table shows.
Production of silver in fine ounces
1929 1930
Mexico 108.871.442 105.410.912
United States 61.233.321 50.627.243
Canada 23.143.261 26.435.935
Peru 21.495.169 15.500351
Totals 214.743.193 197.974.491
Peru. it may be remarked here, is one of s ever al South American States whose purchasing power has much declined through the fall in one of her chief products and the Peruvian State Finances are in a deplorable condition. Moreover a smaller output means less wages paid, and a general decline of prosperity. ■



CHAPTER XVI
THE EFFECT OF THE JETTISON OF SILVER ON THE CHINESE EXCHANGE AND ON CHINESE TRADE. THE GOLD MENTALITY AT IS WORST. SOUTH AFRICA OFF GOLD
The effect of the silver jettison on China was in the first place of course the decline of the Chinese exchange rates, as the following table shows:
Silver and Chinese exchange
Jan. 1920 Jan. 1922 August. 1931 Oct. 1932
Price of Silver
in London 89 d 34d 13 17% Shanghai exhange
on London 8/7 3/2 1/2% 1/9%
China, therefore, could no longer afford to purchase British goods or any other goods from abroad on anything like the preceding scale. And although British exports to China form but a comparatively small percentage of Britain s total exports, still the Chinese trade has always been of very great importance to such a large industry as that of Lancashire. Japan, however, carried on a far larger trade with China and as to 25% of her exports she depended upon the Chinese market. Japan, at the same time, was a large customer of Great Britain and the United States, and thus her trade with .China shows a very good example of the so-called triangular trade movement. The following table shows the exports of the United States to Japan and China.



United States Exports of merchandise to Japan and China.
In 1000 dollars Japan China
Average 1921-25 $ 241.877 Average 1921-25 $ 104.175
1925 . . .. 229.642 1925 . .. 94.442
1926 . .. 260.754 1926 . . ,. 110.205
1927 . .. 257570 1927 . . .. 83.471
1928 #| . .. 288.158 1928 . . ., 137.651
1929 . .. 259.157 1929 . .. 124.163
1930 . „ 164570 1930 . . .. 89.605
The total for Japan and China together in
1929 was $ 383.290
1930 . ,, 254.175
Decline . . $ 129.115 or 56 •/•
As the United States depended upon these two countries in 1928 for 850% and in 1929 for 7.50% of their export trade. this enormous fall in 1930 was a very serious matter to American export trade generally. As had happened in 1921, the world trade slump started again in Japan where it had been due to the decline of the Chinese silver exchange; and from Japan it spread to the United States and from that extremer/ important trading country, all over the world from the beginning of 1930 onward. Exports from the United States to South American silver producing countries accounted for about 10% of their total exports. and thus the United States were more interested than most countries in the Silver Problem, both as producers of silver and as exporters of merchandise to both silver-producing and silverconsuming countries. This of course combines to explain the interest that has always been attached to silver in the United States.
The importance of the Chinese market to flour-exporting countries such as Canada (as well as the U. S.) is illustrated by the following letter, which Mr. S. H. Dodwell of London wrote to the Times of June. 1931:



„As a merchant engaged in trade with China I know from my own firm's experience that Canadian flour, which last January was more tham 42% cheaper in Canada than it was in January 1929, is nevertheless 20% dearer to the Chinese buyer simply because of the depression in Chinese currency brought about by the abnormal fall in silver. This disastrous drop in the price of silver, whfch enormously restricted sales of flour in China, is surely a monetary disability without which it is reasonable to suppose that China could by now have relieved the Western nations of a substantial proportion of their superabundant production. Have not the Western nations, by the debasement of silver, erected a barrier against their trade with China higher than any the Chinese have themselves erected since tariff autonomy was conceded?"
As it is, whilst in China a great deal of misery and starvation prevail quite apart from the disturbances, the United States and Canada cannot sell their wheat, and American farmers are desperate. It was later/ reported that an American trading concern had endeavoured to sell flour to China on the instalment payment system, and against security of customs revenue. The United States possess more gold than a miser has ever seen in his wildest dreams, but what the starving Chinese want is bread! And still the gold mentality claims a better right to let Chinese die of hunger than to drop the Gold Standard. 1)
Mr. Havinga, speaking at the Free State National Party Congress on October 19th., 1932, warned farmers of the dangers of building up an export industry on artificial stimulants, such as levies and subsidies, as these were in the long run doomed to failure since they violated the natural law of supply and demand. The only abiding improvement of price levels, he said, would not come about as the result of artificial tampering with monetary standards, but must be
•) New Zealand is now (March '33) reported to be selling wheat to China. But the N. Z. Pound Sterling stands at about 50% below gold-parity.



founded on a sound gold basis. The dot of production would have to cease.
Here we have a very striking example of the absolutely cruel and pitiless gold mentality. According to this barbarous disposition it is better for the world to be poorer in goods and incidentally for Chinese and other Asiatics to starve, so long as the product of the gold mines is kept on its pedestal. When the world has been enormously enriched by the. triumph of human scientific skill over Nature's blind forces, and a thousand million human beings may thus be better provided with their wants, this is called „the riot of production"! The world may go naked and hungry as before, what does it matter to the gold mining interests! When in the countries of the West some thirty or forty millions of unemployed lead idle and unworthy lives and thus promote vice and unrest, what does it matter to gold mining! When costly ships are broken up, splendid factories left to decay, the whole of humanity is threatened with an upheaval such as the world has not yet seen what does it matter to gold mining! When England has had the courage to burst the f etter made of gold this is „tampering with monetary standards". Mr. Havinga no doubt knows bis Bible. In Exodus 32:9 and 35 he will find that the Lord „plagued the people" because they worshipped the golden calf.
When the silver mining interests plead the cause of silver, which I maintain is at the same time the cause of humanity, it is often said that they do nothing but display the interest of the industrialist in his product. The reproach is never levelled at the gold mining interests, yet their mentality has been exposed above at its worst. In this connection I may mention that when experts on economics declare that the collapse of world trade is not of monetary origin, it is ten to one that the opinion is given by a gold monometallist.
Within three months after Mr. Havinga made the speech to which we have referred above, the Union of South Africa



too went „off gold'". The chief gold producing country thus has had to abandon its own product. But this will have the effect of stimulating the output for the more the South African pound approaches the level of the London exchange rate, the higher will be the price the South African gold mines will obtain per ounce of gold. On the other hand South Africa cannot be certain that prices of commodities will not rise to such an extent as to cause wages and the cost of production of gold to increase sufficiently to nullify the effect of the higher exchange rate. In England domestic prices rose but little, but in South Africa, for all we know, other conditions may prevail. Should this not be the case, and should South African gold mining interests reap the full benefit of the exchange, the prediction of the Times of December 31st., 1932 may come true, that immense tonnages of low-grade ore, hither to lying fallow, may be worked to advantage, that new areas may be opened up, and that other branches of the mining industry may gain by the departure from the gold Standard. The curious situation would then arise (supposing that the output of gold increased very largely) that the abandonment of the gold Standard by the chief producer made a return to it possible. But as I pointed out in another chapter, such return would be followed by a repetition of present perplexities, unless silver were to add its purchasing capacity to that of gold.
The advocates of the gold Standard proceed from the assumption that the scarcity of gold was not at the bottom of the world's perplexities but that the refusal of the creditor countries to accept payment in goods and services were the main cause of them. I think I have proved this assertion to be wholly wrong, and I have often placed the facts before some of these gentlemen privately. Despite these warnings they have persisted in propagating the fallacy, with the effect we see before our eyes. Propagating the cause of gold, they have no right to reproach the silver interests when they advocate the cause of silver.



CHAPTER XVH.
THE WANTON DESTRUCTION OF THE VALUE OF SILVER. EVIL EFFECT ON ACTUAL AND POTENTIAL TRADE WITH CHINA. INCREASE OF WORLD TRADE SINCE 1913.
Thus the wilful and uncalled-for destruction of the value of silver provoked the world slump, of which it had been to a very large extent the cause.
An enriched Asia, in fact, as in 1919 and 1920. would have greatly helped in absorbing the enormously increased production of commodities of which the following table gives a few details 4 Movement of Quantum of Trade. *)
1913 1929
Europe 100 111
North America 100 126
Latin America 100 120
Africa 100 135
Asia 100 156
Oceania 100 Hl
World 100 131
The great increase of the Asiatic movement of the quantum of trade is due to those parts of tropical Asia which after the war have been much more rapidly developed than before especially with regard to Rubber, Sugar and Tea. Of the two former articles indeed the production has been larger
1) Vide Table IX p. 50 Memorandum 1929 and Table X p. 40 Memorandum 1931.



than appears compatible even with a much extended purchasing capacity of the silver-using countries of Asia which have not contributed to the increase of the quantum of trade to any large extent, as is the case with the Asiatic territories in the British, French and Dutch Asiatic Colonial Empires.
China, as has been remarked, might have absorbed a considerable percentage of increased production. But her declining exchange has provoked a contrary movement. The daily wage of skilled labour there is now equal to rather less than 1/6 and unskilled labour about 20/- per month. Hence the Chinese cement industry has already ousted its Japanese rival and Japan has been obliged to relinquish the gold Standard. China and Japan export at extremely low prices such articles as cigarettes, matches, goloshes, fountain pens, hats, paper, pumps, motors, radiators, in short all kinds of goods of which the production is largely a matter of low wages. The output of cotton yam in China, in 1915 was 250.000.000 lbs.. in 1929 943.000.000. The output of cotton textiles in China in 1915 totalled 45.000.000 yards, in 1929 590.000.000 yards.
These figures, which have been supplied officially by the authority named *) show that as has been truly said China, from a consumer of manufactured goods, has become a needy rival of Western and in the first place of Japanese industry. Thus the decline of silver has increased competition from a country where labour has always been cheap and abundant, and accentuated the fall of world prices. This is another way besides through the exchanges and the metais as described above, in which the East reacts upon the wanton destruction of its money.
When Mr. Amery in the House of Commons moved an amendment (which however was negatived) to permit the Treasury to purchase silver as well as gold he said, inter alia,
') Report of the British Economie Mission to the Far East.
*) Times May, 26, 1932. •) Japan appears to be practically on silver.
8



that the Chinese market though it was nothing compared with what it might be if peace and order were restored in that country, was even now of the greatest importance to England generally and to the textile industry in particular. „The amendment" he declared, „would do something to correct the very undue fluctuations in the sterling price of silver which had taken place in the last few years. During that period the value of silver. in terms of gold, had been reduced by something like 50%, with most serious consequences to the whole export trade of this country to the Far East and, incidentally, had accentuated the world price fall by currency dumping. That fall had not been a mere casual result of economie circumstances nor of a glut in the production of silver from the mines. For the last ten years there had been a shortage in the production of silver from the mines compared with the demand of about 328.000.000 ounces. The deprecation and fall of silver had been due to artificial government action in different countries. The sale of some 400.000.000 ounces of government silver had acted and obscured the shortage in the silver supply and had brought about this very serious fall. It was true that India was not on a silver Standard; she was linked to sterling and to that extent had a managed currency. But while the Rupee was the official currency in India, side by side with it there had always gone on an unofficial reserve currency. Every peasant in India, from time immemorial, regardless of the fluctuations of silver, had gone on putting his savings in silver as a reserve for emergencies. If the millions of India knew that their silver was worth more, their whole attitude towards economie problems would be affected, they would be readier to purchase, and, to that extent, India would be a better market. From the point of view of social contentment, the peasants of India too would feel more assured of their position. When it was realised that a good part of the world was unable to dispense with metallic currency, and there would be a shortage in 1940 of something like £49.000.000



in the world supply of gold, it was obviously desirable that the bringing of silver into the picture again at some definite ratio with gold and sterling should be considered."
Sir R. Home said that it would be a good thing if they could get rid of the gold mentality which had prevailed so long, and began to think seriously in terms of the new situation with which they were faced. Last year the American Senate had passed unanimously a resolution asking the President to call an international Currency Conference and, according to his information, when a tentative suggestion came from America to the British Government, it was not received with enthusiasm. Since then the question had progressed in America much farther. The Coinage Committee of Congress, quite independant of its composition, for it had not a single representative of any of the silver States, recently reported in favour of a Conference of Nations interested in the restoration of the price level of commodities through the stabilisation of international exchanges, and declaring for the utilisation of silver as well as gold to that end. No ultimate solution could be reached by the action of this country alone; it required the cooperation of other countries, and particularly the United States.
Sir Hilton Young, replying for the Government, suggested that China was the only considerable country where silver was used as an active currency. The sharp increase in the value of the English Standard, gold, was generally agreed to have been one the principal misfortunes of England because it was accompanied by a sharp fall in prices. We should therefore not ex peet anything different in China if there was a sharp and violent rise in the price of silver. Some moderate rise might be expected to benefit China's trade and the customers of China. But they were concerned, not with the benefit of the world at large but of British trade. Not the gold value but he sterling value of silver concerned them. If they increased the sterling value of silver, they would increase the purchasing power of China in Great



Britain. If they increased the gold value of silver, they would increase the purchasing power of China everywhere equaHy.
Sir Hilton Young, in saying that the sharp increase in the value of gold was „accompanied" by a fall in prices appears to have overlooked the fact that one thing means the other and that the phenomenon is world-wide. Moreover, in China prices have not fluctuated much with the fall of silver, for wages have hardly risen. It is not Chinese home trade which is affected by silver, but her foreign trade, and Sir Hilton Young misinterprets the situation when he thinks that a rise in silver would „benefit China's customers". The contrary is the case. in that she would have to raise her selling prices and thus help in raising world prices, which is what appears to be the universal aim of all endeavour for betterment of the crisis. A further fall in silver would therefore make matters much worse and further stimulate China's exports without raising wages within that country. Moreover, no country is so much interested in world trade as Great Britain and it does not appear wise to try and monopolise Chinese trade through the sterling exchange Standard to the exclusion of the trade of other countries with that vast country of unlimited possiblilities. The operations of world trade, as often as not ,are „triangular", that is to say, when a certain country A purchases goods from country B. it may only be able to do so because it has been able to sell to country C.



CHAPTER XVIII
THE NEW BIMETALLISM
In his handbook on money Lord Desbourouph strongly recommends the use of both the precious metais linked together by a ratio as one metallic money for the world. „There was never" he says, „enough gold to pay debts or to carry on the business of the gold-standard countries indeed, if all the monetary gold in the world were collected, it would pay about óne third of our National Debt. The pyramid of credit reared on the narrow gold basis has collapsed. If Bimetallism were enacted tomorrow, the ordinary man would probably not know that we had abandoned goldmonometaüism and that our reserves were held in silver as well as gold, and if prices rose too high the unsecured note issue could be curtailed but there are many good reasons in support of a ratio of 20 to 1." 1) This author rightly thinks that the crisis is not so much a crisis of over-production of commodities as of an under-production of money. He believes that the British Empire and the other countries on sterling might accomplish the object.
The main point about this argument apears to me that there can be no danger of „silver inflation" because this could be met by a curtailment of note circulation if prices rose too high. Seeing that the circulation of the entire world exeept China consisted of notes and credit before the collapse, and that were was a distinct gold inflation, in order to finance the enormous increase of production and the consequent improvement of the Standard of life, the whole structure having collapsed from scarcity of gold, it is obvious that a
1) Vide page 82 re differences in ratios of value and of production.



return to larger supplies of metal coinage instead of paper would mean a great improvement and restored confidence.
The East has lost a great deal of its confidence in silver, and the question is wether a restoration of Bimetallism with the two metais kept separate, would restore that confidence. This is one of the reasons why I believe Symmetallism, i. e. an alloy of the two metais would be more expediënt as the better form of Bimetallism.
Bimetallists, moreover, may point to a far better record than the gold monometallists. When the world was on Bimetallism there never has occurred anything like the present world collapse of prices and trade in full peace time. When the crisis broke out there had been peace between the principal nations of the world for itvelve years and the wealth of the world was increasing so fast as to rapidly exceed even the gigantic losses due to the devastations of the World War. A most remarkable instance of the recuperative power of the post-war world is that although the losses from submarines exceeded 15.000.000 tons, world tonnage rose from 23.000.000 tons in 1914 to about 46.000.000 tons in 1932.
If Bimetallism be not restored, in whatever shape, the scramble for monetary gold is sure to recur when conditions similar to those of 1929 arise again. As events have shown, not even a World War is needed to bring the scramble about, for I have proved conclusively in the Chapter on Gold that America collected the War Debts in goods and services and that they were paid by profits and wages and left a good deal over. The scramble may occur in full time of peace and is bound to recur, even if the Rand Mines, through new discoveries, increase the supply of gold appreciably.
To make gold at once less likely to be scrambled for and to make the little the world disposes of go a long way it appears necessary to adopt Symmetallism, especially for the reason given above. Under that system the bullion to be held by the Central Banks as a base for fiduciary currency and credit, and as a means for keeping exchanges as stable as possible, should consist of an alloy of



gold and silver, perhaps at the ratio of 20:1 as recommended by Lord Desborough, or at a ratio to be fixed by as many of the leading Powers headed by Great Britain and the United States as may be found willing to cooperate, together with the four chief silver-producing countries enumerated in a previous Chapter. This would make gold hoarding much more difficult, and perhaps redundant as world prices would rise as soon as confidence is restored, which will be the case when it is feit that a new leaf has been turned over, that something new is being attempted, has been achieved. Moreover China with about one quarter of the world's population, would be incorporated in the world's monetary system instead of being excluded from it as she is now, and is likely to remain owing to the scarcity of gold. She would be able, as soon as order is restored to add her immense human and material resources to those of the West and an expansion of commerce might result which might well surpass bold expectations. For be it remembered, the Chinese differ from such stocks as the Russians in that they are intellectually speaking a superior race, well worthy of admittance to the totality of world economy. China's present share of world trade, 2.12%, is ridiculously small when it is remembered that her percentage of the total population of the world is about fen times as much.
Other countries in Asia, .such as Persia, Afghanistan, Arabia, Mesopotamia etc, which are now trying to adopt the Gold Standard, when there is not enough gold to go round as it is, would also be greatly benefited.
India and all the countries of the Asiatic mainland including Abyssinia and large territories in Africa would see the value of their coins and hoards increase and hence their purchasing power, whatever learned economists may say.
The silver producing countries would see the value of their product rise from its present annual value of say £ 13.000.000 to anything up to £52.000.000. States such as Peru and Bolivia would return to sound finance and be able to satisfy their bondholders, Mexico and the other states of Latin America would prosper and spread their prosperity around them, in the first place into the United States.



CHAPTER XIX
FORTY YEARS AGO AND NOW
At the time of the Brussels Conference of 1892 Bimetallism was shelved and the doom of silver became inevitable. But that is forty years ago. In 1892 the production of gold was 7.094.266 ounces, that of silver 153.151.762 ounces fine. In 1930 the figures were 20.160.356 and 248.139.133 respectively. The production ratio, which was 21:1 in 1892 had fallen to 12:1 in 1930; and to 7:1 in 1932.
The following table will give the reader an idea of the increase of the world's wealth in these 40 years.
World Population, Output of Precious Metals and Trade in 1000 's
Percentages of 1892 1913 1929 increase 1 92-13 | 13-29
Population... 1.450.000 1.732.000 1.990.000 19.44 13.75 Stock of gold
money .... £ 752.500 £ 1.579.000 £ 2.336.200 109.7 48 Annual Output
of monetary gold 4729.41 oz. 11.882 oz. 19.647 oz. 151 65 Annual Output
of silver ., 153.152oz. 210.013 oz. 260.970 oz. 37 24 World Trade,
value .... £3.410.000 £5.220.000 £ 14.184.000 53 170
I have here given the figures for the „normal" years. The year 1929 was the last post-war normal year. The year 1913 was the last pre-war normal year.
Whereas from 1913 to 1929 world trade increased by 170% in value, the stock of gold money had only increased by 48%. The total currency had increased from 1913 to



1928 (the figure from 1929 is not given) by 110% and we may take it that the 1929 figure would show an increase of 115% against an increase of world trade of 170%. Against the increase between 1913 and 1929 of annual gold output for monetary purposes of 65% the increase of trade was 170%. Obviously production and trade had far outgrown the supplies of gold. Even the complete withdrawal of gold from circulation and the application of the ill-fated gold exchange Standard could not make up for the disparity, as the world-slump has proved. A shrinkage of world trade to a much lower level will no doubt make up for the disparity. but at the cost of trade and producdon and prices. which will only rise when the disparity has been adjusted. As has been remarked on a preceding page the world is thus between the devil of a low production of goods and the deep sea of an adequate supply of gold. Should the well-being of mankind be thus sacrificed to the gold mentality?
When 40 years ago the last Silver Conference was held at Brussels, the output of silver from 1873 tot 1892 had increased by 142%. The economie situation of the world at that time was such that the constantly rising supplies of silver appeared to constitute an inflationary danger, as it was thought that world production and trade could not absorb these increasing quantities. Moreover, the trend of economie and financial opinion was in favour of gold. No thought was given to the countries which in the course of ages 'had invested their savings in the white metal and preferred it as a measure and store of value. Nor was the increase of banknotes in circulation reckoned as more risky than the possession of silver coins. The immense losses inflicted upon the belligerents, especially the French and Germans may have awakened sad longings for the possession of the five franc pieces or thalers of 40 years earlier.
The enormously increased output of gold in South Africa appeared, for a time, to confirm the preference for the yellow metal. But as time went on and especially after the war,



trade and production increasing by leaps and bounds, gold supplies feil so far short of actual requirements that the various makeshifts discussed in Chapter II had to be resorted to as a camouflage for gold shortage and gold inflation.
The Bimetallic Problem at present is still a controversial issue. But that gold scarcity is at the bottom of the world's ills will soon be no controversial issue but a certainty. This treatise has been written for the purpose of bringing that certainty home to the reader. As soon as it shall have penetrated mens minds sufficiently by the aid of better pens than that of the author Bimetallism in whatever shape or from will be a solution, in respect of which its advocates will be able to point to a clean record, such as no m o n o-m etallist can claim for gold. Bimetallism was relinquished, not as gold was, because it had caused a world-collapse, but for no particular reason, except that gold was held to be the better Standard. It is impossible to find any other really strong reason adduced in the history of Bimetallism. Gold was the rage, as Democracy has been the rage. Both of these are in the habit of abdicating at a crisis.
The chief objection against Bimetallism is that it will be impossible to fix a ratio between gold and silver, and that even if it were possible to do so at anything between say 1:15 and 1:25, silver coins would be too heavy and most governments would decline to incur the extra expenditure. If the ratio were fixed too high no useful purpose would be attained, for the losses, wantonly infhcted by the West upon the East would not be made good, nor would the purchasing power of the East be raised. The much-desired rise of prices of commodities would thus not be promoted. If the ratio were fixed too low, there might be serious perturbances of interests based upon adjustments that now belong to History. The time, when under free international coinage of both gold and silver the ratio would have fixed itself in accordance



with the production ratio, which was fairly stable, has been allowed to pass by previous generations. It was not a natural event which killed silver by over-production, it was legislation: in 1816 in England, in 1873 in Germany. in 1878 in the rest of Europe, in 1893 in America and India, in 1920 again in England and Europe, in 1927 again in India. As the governments were the largest purchasers of silver for coinage, they could have kept up its value, instead of which from mere infatuation they killed it.
Forty years ago the lessons of the previous World War had been forgotten. Bimetallism was declared to be ,,as dead as the Dodo".
Another World War has taught the world that gold as a Standard lacks elasticity since there is not enough of it, and is a Standard that serves well only in fair weather; a good servant, but a bad master.
I shall have to face the ridicule that is meted out to any advocate of some radical change in devoting my next chapter to Symmetallism as an alternative which used to be ranged among the „fancy" standards in the good old days when none foresaw the perplexities that now confront the world.
In suggesting Symmetallism I do so in order to put forward a constructive measure. The objections against it, from a point of view of practical banking may, for all 1 know, outweigh whatever advantages Symmetallism might posses. Practical banking, however, may mean vested interests, and vested interestst may obstruct progress. Progress, however, may add enormously to the profits of practical banking.



CHAPTER XX
SYMMETALLISM. EMPIRE CURRENCY
No investigation deal in g with a possible monetary remedy for the universally prevailing chaotic state of world trade and industry can be efficiënt as long as it starts from pre-conceived notions, and as long as its conclusions are not based upon experience and undeniable facts.
Experience has proved that gold by itself is not an efficiënt measure of value. and that it is a fair-weather Standard, which has to be abandoned whenever there is a crisis. As long as War has not been abolished ■— and unfortunately this consummation is not in sight — and as long as economie crises are unavoidable, a long spell of ..fair weather" cannot be relied upon. Experience has taught' the world that it should rather ex peet the reverse. Moreover, incontrovertable statistical evidence, as well as the calamitous fall of prices prove that the supplies of gold are inadequate to carry the trade of the world when the value of silver is destroyed, as shown in Chapter IX. and as was predicted by Mr. Montagu Norman.
In the later 'eighties of the 19th century gold scarcity. due to an insufficiënt increase of stocks *) had caused a serious fall of prices of commodities. The situation of those days shows much analogy with the present crisis; gold was scarce. and silver had fallen from 50d in 1885 to 42 in 1886. Hence a study of the proceedings óf the „Royal Commission on the Depression of Trade and Industry" (1886), known as the „Gold and Silver Commission" is very useful, particularly that of the evidence of the late Professor Marshall, which
1) In this respect Table B, p. 82 of the Interim Report is very instructive.



the reader will find in extensö in a volume, entitled Official Papers by Al f red Marshall l). In 1886 the fall of silver amounted to only about 15% and already such a fall had calamitous results. Thé fall from 25d in 1929 to about 12Sd in 1931 amounts to 50%. The results are in proportion.
The late Professor Marshall, when asked *) whether „an international agreement could be made for the free coinage of gold and silver as legal tender at a fixed ratio, and *) whether „it is in the power of governments to maintain such a ratio if agreed upon" and „whether the practice of the commercial world would follow the law", answered in a „Preliminary Memorandum" dated November 1887, which I allow myself to quote in extenso because it is pregnant with monetary knowledge and wisdom, and although nearly half a century old, is quite applicable to the situation of today.
„I shall presently argue," Marshall says in the Memorandum, „that the plan of opening the mints to gold and „silver at a fixed ratio has no right to be called bimetallic, „and therefore I shall speak of it as fixed-ratio-mintage „in order to avoid ambiguity.
„The phrase „the power of Governments" apears to me „ambiguous. If the Governments of the chief commercial „countries were to agree to a fixed-ratio mintage, and if „they were to subordinate every other end to maintaining „this ratio, I have no doubt that they could maitain it, at „all events for a very long time. In this sense it would be „in their „power" to do it. But hitherto they have not done „what is in their power to promote stability of prices: each „Government has thought first of the interests of the nation „it represents and endeavoured to secure for it a good supply „of gold with but little reference to international interests. „Our own Government has not indeed, tried to collect a
') Edited by ). M. Keynes for the Royal Economie Society, Macmillan & Co., 1926.
2) Question X p. 23.
3) Question XI p. 23.



„large hoard of gold; but it is jealous of the issue of £ 1 „notes, partly as they would drive abroad a part of our „gold coinage.
„The real question is, then, not what governments could „do, but what they would do if the inducement to scramble „for gold were much increased? And I submit that the „adoption of fixed-ratio mintage would be not unlikely to „increase those inducements very much.
„Governments, as well as private persons, hoard gold „rather than silver partly because it is more convenient, but „partly also because they think that the value of gold „relatively to silver is, on the whole, more likely to rise „than to fall.
„I venture to think that the arguments by which advocates „of fixed-ratio-mintage have endeavoured to establish its „stability are vitiated by their paying too little attention to „the influence which the adoption of that scheme might have „on the one hand in checking the production of gold, and „on the other hand in increasing the inducements to hoard it.
„My contention is this: If fixed-ratio-mintage tied the value „of gold at 15S of silver, then, in the event of a continued „fall in the cost of mining silver relatively to that of gold, „the following results would take place:
„Fitstly: Many gold mines would be closed; the profits of „silver mining would be abnormally high; and the supply „of silver would be much increased. Secondly whereas at „present out of the £ 20.000.000 of gold produced annually, „about £ 12.000.000 are (according to Dr. Soetbeer and „M. Ottoman Haupt) consumed in the arts, while about „£ 3.000.000 are sent to the East; and whereas this „consumption of gold in the arts is to a great extent modern, „is the result of the growth and diffusion of wealth, and is „likely to increase even in countries where gold ornaments „are not, as in India, valued partly as means of hoarding; „therefore before long the consumption of gold in the arts „would probably exceed its total production by many millions



„annually. Thirdlg: The stock of gold thus rapidly „diminishing, while the stock of silver was rapidly increasing, „people would begin to discuss what would happen if „anything should cause the fixed-ratio-mintage convention „to break down; they would speculate as to whether the „value of an ounce of gold would then rise to that of 20 or .30 ozs. of silver, or, perhaps, even higher. Fourthly: „Discussions of this kind would greatly increase private „hoarding. The rate of the interest on secure loans of capital ,,is falling and seems likely to fall, and every such fall „increases the inducements to hoard the precious metal that ,,is likely to rise in value. If an ounce of gold can be got „for the price of 151 * ozs. of silver, if there is reason to „believe that it is tied down to that value only by a convention „which is in some danger of being snapped, then many people, „especially country folk, may come to think that, after „balancing risks on both sides, they have as good a chance „of getting good interest on their capital by turning it into „gold and hoarding as by lending it out. Meanwhile, those „countries which were outside the fixed-ratio-mintage „convention, but yet used gold coins, whether as legal tender „or not, would absorb a great and probably increasing „amount of gold for currency purposes. They would think „it wise to take advantage by a cheapness which might „not last.
,,Lastly comes the question, what would be done by the „governments which had adopted fixed-ratio-mintage? I will „admit that if they chose to reverse their present policy, and „instead of scrambling for gold were to give it freely out „of their treasuries, they might so disappoint the hopes of „those who looked to a rise in its value as to check private „hoarding; and then the stock of gold would be left to be „attenuated by the comperatively slow process of a consumption for the arts in excess of the production from the „mines. But I see no reason for believing that they would „do this. They would be unwilling to give an ounce of gold



„for 1512 ozs. of silver, when there was a considerable chance „that before long it might be worth 20 or 30 ozs. Each „Government would probably prefer national interests to „those of an international currency in the future as they have „done in the past, and would scramble for gold even harder „than now. If so, a very few years would suffice to sweep „all gold coin out of circulation in the countries that had „adopted the convention. There would be stores of gold at „the great banks, but the expansion of the volume of currency „would depend almost exclusively on the supplies of silver. „In England and other Western Countries, silver would ,,be confined, as now, to a subsidiary use, and the main body „of the circulation would consist of paper. For all practical
„purposes it would at once be absorbed by the arts and 
„by the countries outside the convention. On the not „improbable contingency of a continued fall in the cost of „mining silver relatively to that of gold, it would rapidly „degenerate into a system of paper currency on a mono,,metallic silver basis.
„Nevertheless, I think that an international currency is „badly wanted and must be ultimately adopted, and I should „therefore regard fixed-ratio-mintage as not without „some compensation. Even if the scheme collapsed quickly „we should perhaps be helped on our way to a better „and more scientific plan. The experiment should not be „ventured upon until more time has been allowed for „considering the problem".
Answering Question XII: „What would be the effect of „Such an agreement, if carried out, upon (a) prices, and (b) the production of the precious metais?" Marshall said that as to the belief that prices will rise, he should expect a perceptible rise of prices, especially if silver mining would become cheaper relatively to gold mining. True Bimetallism would increase the output of whichever of the two metais was scarce, whereas fixed-ratio-mintage would increase the production of the metal that could be most easily mined.



„I regard, he declares, „true Bimetallism as the best basis „of art international currency, because it causes the value of „legal tender money to vary with the mean of the values of „both of those metais which are suited better than any other „easily portable commodities to afford a Standard of value; „and because it would be convenient both to those countries „who use chiefly gold and to those who now chiefly „use silver".
Marshall does not approve of true Bimetallism consisting of the use of an amalgam of gold and silver 1) for legal tender coins, as it would be difficult to test the composition of such coins and their weight would render them almost as unsuitable for general use as silver coins *). With reference to Ricardo's plan of a paper currency based not upon coin, but of stamped gold bars weighing 20 ozs. each, (such a bar would have the value of about £ 85) Marshall suggests a system of what I think has become known later as the „linked bars" system. Under that system Currency would be exchangeable at the Mint or Issue Department, not for gold but for gold and silver at the rate of £ 1 for 5612 grains of gold together with say, 20 times as many grains of silver. In order to make the system international he would have gold bars of 100 grammes together with silver bars of 2000 grammes. He would fix the ratio once for all at possibly 1 to 20. If we wished the currency chiefly to be regulated by gold, we should have only a small bar of silver, if chiefly by silver a large one. „But if we wished the two metais to have about equal influence we should, taking account of the existing stocks of the two metais, probably choose our silver bar about 20 times as heavy as that of gold". Against the stocks of gold and silver he would issue paper currency, which would not be allowed to exceed about three times the
1) The „Electrum" of the Anclent World. H. D.
2) According to expert advice, however, this objection does not exist now, nearly half a century later. Nor would the weight of the coins render them difficult to handle.
9



bullion reserves, except at an emergency. when the discount rate were to rise to some exceptional figure. His scheme recommends itself by the great saving on the wear and tear of coins. There would be token coins of silver, but it is doubtful wether token coins made of gold would be useful Marshall thinks this scheme has the following advantages:
(1) . It would be economical and secure.
(2) . The largeness of the reserves would obviate the
sharp twinges which now frequently occur in the money market.
(3) . The value of the paper currency would vary with
the mean of the values of gold and silver.
(4) . As it would not attempt the control of the relative
values of gold and silver, and even if an ounce of gold were to become worth 50 ozs. of silver i— this was in 1887 1). the ratio of value is now (March 1933) about 1 to 85 — it could be begun at once and without risk by any one nation and it would be specially suitable to Great Britain and India.
(5) . If adopted by several nations it would at once
establish a perfect international basis of currency and prices. Every country would retain its coinage and the national denominations of Francs. Dollars. Pounds. Guilders etc. But every note would state on its face how many francs, dollars etc. would be exchangeable for a Standard pair of bars of 100 grammes of gold and 2000 grammes of silver. Symmetallism, or the „linked bar" system as thus advocated by the late Professor Marshall might well be preferable to the René Léon plan (see page 93) because it obviates the necessity of re-abolishing the debased silver token coins issued in Europe after the War and replacing them by silver coins of 0.900 fine. This would be a very expensive matter to all Western countries. except the United States, where no
') In 1887 the ratio was 1:23.



debasement of silver token money took place. In those countries, on account of the expense, therefore, the René Léon plan would meet with serious opposition, especially with a view to the universally prevailing unbalanced budgets and to the probable very considerable rise of the gold value of silver in case the plan were adopted.
Obviously any plan which involves the rehabilitation of silver might cause such a rapid rise of the gold value of silver as to upset trade adjustments which have been already carried out in the East and in silver-using countries generally. Probably, for the time being, a rise of the gold value of silver to its pre-crisis level of about 2/- gold (say $ 0,48) per ounce Standard would be suffient for creating the much-needed increase of the purchasing capacity of India. China and the other countries affected by the fall of silver. induding of course the silver producing countries.
A return, therefore. to Bimetallism in whatever form, should be gradttat and might be spread over a number of years. Thus the loss which, for generations. has been inflicted upón the East. and which is a disgrace to Western Civilisation, would be made good to some considerable extent. The rise of world prices of commodities which is bound to follow the introduction of Bimetallism would enable the silver-using countries to dispose of their exports at remunerative prices. and they would become good markets to sell in. Even if adopted with a view to only a gradual introduction. the Marshall plan would open sure prospects of a rise of the gold price of süver and with that prospect confidence would be restored to trade and industry and rising prices would result. Without such a rise, be it remem/bered.the legacy of the past. consisting of all Government and other gold debts becomes an unbearable burden.
The general price levd, since the inception of the crisis, has fallen by about 50%, which is the fall of the price of silver. This was not due as in the case of other commodities, to over-production, but to artificially promoting under-con-



sumption by demonetization. Only those who cannot see the causal nexus between world commodity prices and gold prices of silver will be surprised at the fall of 50% in both ins tances.
Next to its merit of raising the gold value of silver the Marshall plan is conspicuous by its great Simplicity. It leaves national currencies undisturbed and af fords a universal measure of value such as is being clamoured for from all sides, for which each of the two precious metais separately has proved unsuitable. No reorganisation of the kind can however be efficiënt unless it is international. That is the inherent difficulty of all such schemes, but as the present depression affects all countries without exception, an international agreement does not appear so hopeless as on previous occasions, such as the 1892 Brussels Conference.
For the sake of completeness we may return briefly to the idea of Electrum coins. Such a coin, containing 11,3 grains of gold, which represents the gold contents of one tenth of a sovereign, plus twenty times as much silver and some alloy would hold about 237,33 grains of fine gold and silver. Thé weight of such a coin would be about the same as that of about 3 shillings. An Electrum coin containing 11,11 grains of fine gold. wich is the gold contents of half a dollar, and twenty times as much silver. would bring its net contents of fine gold and silver up to about 233.33 grains. The fine weight of these two coins might be made equal at say 11 grains of gold and 220 grains of silver. plus some alloy. bringing it up to say 240 grains. In the British Empire it might be called the „Rex", but elsewhere, also in India, the historie names of the coinage might be retained. In France, Belgium, Germany. Holland etc. the names of piéce de cinq francs, thaler, ryksdaalder etc. might be retained. There would be no free coinage of either gold or silver in the „Electrum" countries, all existing gold and silver coins being withdrawn. The sovereign would be equal to 5 „Rex" of 4 shillings each, and to 5 American dollars. Exchange differences could be



adjusted as before by shipments of bullion in the shape of bars of Electrum.
Owing to the novelty of such a scheme and to the fear of possible temporary monetary disturbances which it might entail (although I do not believe these would be worse than the existing chaos) I do not think there is any chance of its being accepted. Still, Electrum would be the real Bimetallism which Marshall wanted, and it would offer that universal measure of value which the world demands.
The following table shows the extent of the present monetary chaos.



Percentages of the value of World Trade (precious metais not included) of die undermentioned countries in 1929, according to the Statistical Year-Book of the League of Nations.
(The slump has probably not gready altered the percentages.)
lst 2nd 3rd . ,
«"ffi* ^ ^egory. ^
United States .... 13,93
United Kingdom . . . 13,16
Germany 9,\A
France 6,24
Canada ...... 3 48
British India 3 07
feP?»1) 2,89
Holland 2,80
Netherlands East Indies . 1,54
Italy 2,79
Belgium 2,76
Argentine Republic . . qj»7
China 212
Australia ...... 200
Czecho Slovakia . . . 1/75
Malacca (Br.) .... 149
Sweden ...... 141
SP»*n • 1,37
owitserland ..... 1,35
Russia 1 gg
Denmark 1,90
Brazil 1,30
Union of South Africa . 1,23
Austria 1^12
Poland 0Ï98
Irish Free State . . . 0,76
Egypt 0.75
New Zealand .... 0,72 Cuba 0,71
Norway ...... 0,71
Chili 0.69
Mexico ...... 067
Algeria 037
Hungary 034
£°rca 0,53
Rumania 0,52
FMa°d 0,50
Philippine Islands . . . 0,45
') Japan is, although not officially, on silver.



2nd 3rd
r*_. Category. Category. n. _ Doubtful
Gold °°ld Ster'in9 ^U^" Standards
Standard |fhanQJ ^T^S Standard "^gold" otandard otandard
Ceylon 0,44
Yugo Slavia .... 0,40
Greece 0,39
Columbia 0,36
Venuzuela 0,34
Persia 0,34
Peru 031
Formosa 030
Indo China (Fr.) . . . 0,30
Turkey 0.29
Uruguay 0,27
Siam 0,26
Portugal 034
Nigeria (Br.) .... 0,23
Morocco 0,22
Tunis 031
Lethland 0,18
West Africa (Fr.) . . . 0.17
Gold Coast (Br.) . . . 0.16
Bulgaria 0,16
Congo (Belgian) . . . 0,12
Syria 0.11
Kcnya and Uganda (Br.) 0,11
Anglo Fr. Sudan . . . 0,06 0.06
New Foundland . . . 0,10
Southern Rhodesia . . 0,10
Estland 0,10
Lithuania 0,09
Bolivia 0.09
Guatemala 0,09
Trinidad and Tobago (Br.) 0,09
Jamaica (Br.) .... 0,08
Aden (Br.) 0,08
Iraq 0.08
Domin. Republic . . . 0,07
Palestine 0,06
Honduras 0,06
Costa Rica 006
Salvador 0,06
Ecuador 005
Haïti 0,05
Other countries . . . o,7ö 0,75
Totals .... 16.14 34,07 31,08 3.21 15.50



I have grouped these countries in 5 categories:
1. Gold Standard Countries. This category includes only those countries and their overseas territories, whose Central Banks deliver gold for export.
2. „Gold Exchange" Standard countries. This category includes those countries whose Central Banks do not deliver gold for export, but whose exchange rates are kept at gold par.
3. „Sterling Exchange" Standard countries. This category includes Great Britain and the Dominions and Portugal and the Scandinavian States, although these are not officially on Sterling exchange.
4. Silver Standard countries.
5. Doubtful Standard countries, which in any case are ..off Gold".
Summary.
Gold Standard countries 16,14 „
Gold. Exch. St. countries („Protected" G. St. cntrs.) 34,07 .,
Sterling Exchange Standard countries 31,08 „
Süver Standard countries 3,21 „
Doubtful Standard countries „off Gold" 15,50 „
100.00 %
The annexed London exchange quotations on February 28th.. 1933 (from The Times of March lst. 1933) show the deviations from gold par. (see page 138).
If it be agreed that the future output of gold will not suffice to carry the increase of the value of world trade. which may wejl quadruple both as to volume and value in 50 years' time as it did indeed quadruple during the 50 years that preceded the present crisis, and that therefore if the Gold Standard were reinstated the present troubles will recur, the bringing of silver into the picture appears the best solution.
The output of silver, which has greatly declined of late years, would increase again, and keep pace with the demand, for this would be toned down by the use of gold in the



Electrum coins. The same remarks as to the desirability of a gradual change in the case of the „linked bars" system apply of course to Electrum. of which in the long run all the bullion held by the Central Banks should consist.
Mr. Darling. in his admirable pamphlet The Rex, recommends Bimetallism within the British Empire. He proposes a Bank, which would be the only buyer and seller and custodian of the gold production within the Empire since about 70% of the world's gold production is British, especially South African. The monetary unit would be the „Rex" which would be the minimum price for 113 grains of gold. I may remind the reader that one sovereign, weighing 123,27 grains or 0,3568 oz. of 916,6 fine is equal to 112,989282 grains fine, and that when England returned to the Gold Standard in 1925 the obligation was imposed upon the Bank of England to buy 1 ounce of fine gold at £ 4:4:1 l"i« Accordingly Mr. Darling would reserve to the Bank of the Empire the right, under well defined conditions, to raise its price for both buying and selling. What this author recommends, therefore, is an elastic pound sterling, which has materialised since September 2lst., 1931, the „Rex" of Mr. Darling's fancy now being „Sterling Exchange". It seems to partake of Mr. Keynes's plan in his Treatise on Money, which involved an elastic medium of exchange.
One monetary unit for the whole of the British Empire would undoubtedly be a step in the right direction for the larger the territory over which such a unit is spread, the nearer its approach to internationalism in monetary matters. The fewer national monetary units in the world the easier it will be to arrivé at international unity.
To make of „Sterling Exchange" a world currency, however, appears very remote for as the table shows, only about 31% of world trade may be said to be carried on under that Standard, which is not a broad enough base for a world currency. Moreover, the question is whether sufficiënt economie, fiscal and political cohesion could be created within



London exchange quotations February 28th, 1933.
Melhod | Mcthod
Place of Per of Feb. 28 Feb.17 PUce I of Peref F«b. 2( Feb, 27
Quotlng exch'gc. I Quotlng excn'ee,
% ~ ValpuiitUot ISfof I40.M I X
N. York (2'i)$tof 4.M'i )4i-4I'k ).40>4-42 Montevideo. . Per dol. 4». ld. )2ii-14iid,J J2-.MJ.;
Momrcul . Jmi 4 HM) 4,00-4.12 4 10-4 IJIg Ümut (Mj)ISi>tcx t£ 17,38 t *
l'arlii (2't) Fr. lo £ 124 21 86*ié-87li4 86vkm.1 ., . .„ ... u7. ... .,.. ., ...
sr^&s. sa s& k » '^\m^mp&
Swlt/.'lnnd (2) Fr. lo£ 25.22 I7.4.1V()2i2 17 S(»-56t i * OHclel nilc, »90diiyi. t Nomhiiil.| Selleri.
Allicns <9)Dr, to£ .175,(10 58S-6IO 5H3-6I0 A The rate for commercial OH Is li b ptr cenl.
HeUlniilors<6> M. 10. 191.2) 225-228 325-221 i.\,,.,„, Pvruiunu ».th'
Madrid (6>|Al Ftl.leC 2- 1) 4o'„-4i -„, 4MII» UMFIM EXCHANO. RATII
lisbon (6I|) Eicu.to £ 110,00 I09ij-ll()i] |09lrll0l| BirviNO RatBI
Ainet'darn(2'i) Fl, in £ 12,11 m'w sikiv.ki, 10 deyf 60 Uays' 90 d«y»'
Berlln <dm m( 20.41 u>. un,, I4')}.|4t|t — Dementi tleht tliihl ilghi
Vlenna (6)Sch, lof 34.59 29-jii ?'Mu ■
BudiipcM (4'i) Pen. lo £ 37,82 I8>i-20li* IHij-20ij* £ i. d. f i, d, Cl, d, C l. d.
Premie <"/> Kc. u>£ im ;>■> 1141...11m. | Austrnliu ..126 10 0127 2 * 127 IS 0128 7 6
Wanaw (<•>/lom» i 41,18 kii4 >o', toio'. New Zeeland.. IM 0 0|I26 12 6 137 S 01127 17 6
Kiwi (6)L*Uto£ 23.22 ifi'.-im, k.i,.|hi. Sulino Kans i
Bui huren <7) Lel let ki i mi 560-590 SnO-590." — T.T.I Demand
Constuntln'plc Pil. te £ 110.00 7|0S 7011 —— — — ——
Heliirudv (7ij) Din. 101 276,12 340-260 240-200 C I. d. £ »■ d.
Kovno (7)lli, loC 4K 66 1).\t> ii lo Auitmllg 125 0 0 17) 5 0
Mie (|i|l Lev. lo £ 67).66 460-490 4MM90 New heiland 124 10 0 124 IS 0
Kevel (Si j) E.Kr.ioC 18 16 12-14 12-14 ———
Oslo (4) Kr. to £ 18,16 I9'i*-I9*|é i'j'u, i')'Ji<, doling ratos
Siockh'lniü'i) Kr. loC 18,16 I8VI'» |HI)|«-i3|e — ——
('open'un (Jij) Kr, io £ IN lr> 22>i-22i] 22'«-22>i Buylni SeJUnt
Alcxnndrln .. P»t. io C 97.50 97V97NÏ 97V97»i ——■ - — — 
Bombay (3>i) Per rup u, 64. l/6,u->u W6>u-*u C i. d. £ t. d.
CeteMte (l'jlPcrrup, li. 6d. t/t.'w-'.j l/(>'jj-i)j 8.A. Union Terrliory (T.T.'i) 100 17 6 99 17 6
Madrui (Jij) Per rup, li. 6d. l/6>t;->)i I/6>m-*iI D«> (mbIii duin) .. 101 7 6 99 17 6
Hons-kong .. Per dol. — i/i,ih.i/.| l/sV-l/4 1
Kobc (4.38) Per yen 24.58d. l/2>«-l/2<; l/2>*-l/2H "" Buviini ralc Selling 1*68
Shangliin ..Per teel — 1/8-1/8'n l/7',-l/8>< . ■ -
Singapore ,, Per dol, 28.44. 2/)"i«-'« 2/)>Iia-,> C i. d. . i. d.
Butevie (4I|)FI. tof 12,11 8 44-H.4') 1.4)4,47 Rhodenla (T,T.'»> .. 100 5 0 99 IS 0
R. delen, ..Permil. 5.90d. S>i-S>ad.*, s|«-s,nü t Do. (ilghldrefll) .. iou 17 6 99 15 0
B. Alm . Her dol. 47 62d. 4l-42d.* 41424.* • Per 100 London poundi.
the Empire. Its parts are so far distant from one another and conditions are so different that only an event like the World War could bring out its moral unïty. As it is, the Canadian and Australian sterling ex changes although I have included them in the table. are not at London parity and the same apphes to South Africa and New Zealand as the following table shows:
Oo
Photographic rcproductlon.



CHAPTER XXI
OTHER MONETARY STANDARDS NOT BASED UPON THE PRECIOUS METALS. INDISPENSABILITY OF PRECIOUS METALS
As it is believed. I think wrongly in many quarters that even if silver were remonetized, the difficulties with regard to the accummulation of gold would repeat themselves in the case of silver, since that metal would be shipped to „creditor" countries and the „debtor" countries would be denuded of it as they are now of gold, other standards have been recommended, such as the „Tabular Standard" of Stanley Jevons, who recommends debts due to be altered in accordance with the purchasing power of commodities.
Of course the Sterling Exchange Standard as it now exists, has a strong claim in English eyes as from its inception on September 21st., 1931. it has worked fairly satisfactorily and it has been adopted by the whole of the British Empire; to some extent and in a certain sense also by the Scandinavian States and Portugal. Thus about one third of the trade of the world is carried on under that Standard. One third of the trade of the world. however. is far from making Sterling Exchange universal. It is, to say the least of it, questionable whether the United States, the greatest trading nation after Great' Britain. would agree to adopt it. American adherence would increase the 31,08% to 45,01%.
The following countries, as the Table shows, which contribute more than 1% to the trade of the world, in order of importance, are Germany, France, Holland and the Dutch Colonies, Japan, Italy, Belgium and the Belgian Congo, the



Argentine Republic, China, Czecho-Slovakia, Spain, Switzerland, Brazil, and Austria. These countries together contributed 38,73% to the total trade of the world in 1929. Their adherence would bring the total up to 83,74%. Obviously, however, this is quite out of the question, for apart from considerations of expediency, there are motives of sentiment, which even in such prosaic matters as exchange play a very important, and possibly a decisive role. The nations concerned might as well be asked to alter the colours of their national flags.
Moreover, the adoption of Sterling Exchange as a Standard to such an extent would be contingent upon a degree of international co-operation, which so far has been sadly lacking, as is shown by the resolutions of the Lausanne Conference, which haye been completely ignored by the Powers which had agreed to them.
The same objection to any other non-metallic Standard would apply to such proposals as that of Professor Eisler of Vienna, which he placed before the Parliamentary Finance Commission in February 1932. The problem was, he declared. „to evolve a monetary technique. which will continually give to the whole consuming world the purchasing power necessary to absorb the products of human labour and intelligence."
An elastic currency, which expands and shrinks with the aggregate output of commodities appears to be the ideal of many modern economists. These schemes appear to be based, more or less, upon the assumption of the equalitg of all nations, whereas de facto they are all distinct in all sorts of ways, and their state of prosperity is constantly changing; some are enriching themselves, others are becoming poorer. Within the British Empire itself there are vast differences. The bulk of the agricultural population of India consists of extremely poor people. Again, between two „white" nations within the Empire such as Canada and Australia there is much difference, to which Mr. Bennett alluded on October



llth. 1932 {Times October 12th, 1932). when he declared that Canada stood for ..sound money and did not propose to occupy the position of Australia, whose bonds had f allen to half their value in New York". Mr. Bennett, on that occasion, declared that the representatives of the British Empire could not by themselves settle the problem of depressed prices and fluctuating exchanges, and it had been thought wise to await the World Economie Conference.
It is generally admitted as an economie dogma that imports must be and are in the long run paid for by exports. This is a favourite argument of dogmatic free-traders. Experience however, which is our best guide, teaches differently. Some nations in fact, e.g. pre-War Russia import so much more than they export, that they have to borrow the surplus. But Russia afterwards repudiated her foreign loans, so her imports were never paid for at all. This is only one example out of many. History teaches us that some states enrich themselves and rise to power and wealth. whereas others are impoverished, lose their wealth and power and do not pay their creditors. The theory that imports are paid for by exports is one of those slogans which has become Gospel Truth to the masses from being constantly repeated in the press.
Experience, again, has proved that it is useless to attempt too much politically. If the League of Nations, e.g., had been limited to only a few very powerful nations, it could have achieved more politically, just as a combination of a few powerful nations may achieve much economically.
A combination of the British Empire, the United States, Germany and the Scandinavian States, which might be joined by Holland and her Colonial Empire, France, Italy and Portugal, could accomplish economically what the League failed to achieve in the sphere of politics.
For a long whüe yet it will be impossible to work under an a-metallic Standard. As it is, the Second Interim Report truly says on p. 16 that gold had, before the crisis „come into



general use as the foundation, of the monetary systems of the vast majority of the civilised nations for historical reasons into which we need not enter here. But the traditional belief that gold is in a peculiar sense representative of wealth remains, and cannot be ignored. Gold reserves serve to some extent, therefore, to maintain that confidence in the whole structure, which springs from a knowledge that a certain quantity of gold is physically held by the Central Banks."
Even though events should disprove the forecast of the Delegation as to the a probable reduction of the output of gold, the present difficulties would repeat themselves as soon as the constantly growing production of commodities, stimulated afresh by rising prices owing to rising gold supplies, had again outpaced the monetary gold supplies.
A certain quantity of precious metais must be „physically held" by the Central Banks, because they are the easiest portable emblems and representatives of wealth in the opinions of men. The limitation of these physical holdings to gold alone in the West, to the exclusion of silver has led to an unparallelled disruption of the economie life of the world, such as has never happened in full peace time before.
This fact by itself proves that precious metais are indispensable and that paper standards, however cleverly thought out cannot carry the trade of the world.



CHAPTER XXII
CONCLUSION
Forty years after the funeral of Bimetallism at the Brussels Conference there may be a resurrection.
The enormous post-war economie development, resting as it did on the clay feet of the gold Standard and the makeshifts with which is was kept up, had given to the masses in the Western countries the disposal of 5 units of commodities per capita of the population against 3 before the World War. Thus pre-war luxuries have in many cases become post-war necessities. Is it to be believed that the masses of the West will be content to return to pre-war sobriety such as the gold mining interests urge upon them, or that a world, impoverished as to commodities owing to the universal fall of prices, will still be able to support tens of millions of unemployed?
There are many reasons for apprehending much social unrest, which will be aggravated the longer the present situation remains without a remedy.
That the world is anxiously awaiting the World Economie Conference and its outcome is therefore only natural, for its failure may turn social unrest into the upheaval for which rapacious Bolshevism is hoping.
If the gold Standard be reverted to once more by reducing the gold weight of the sovereign, and possibly of the dollar as Senator Borah has suggested, the effect of that expediënt would be nullified again as soon as the production of commodities and the total of world trade had once again overtaken the output of gold, when the trouble would begin again. That would also be the case if the output of gold



were to be considerably increased, for this would again stimulate production owing to the rising prices. The new methods of production have created such an almost ungovernable stream of all sorts of commodities that the world will recjuire all the precious metal that can be put at its disposal, both gold and silver, for financing it. For as Huntington-Wilson truly says, precious metais are indispensable as they mean „commodity-money" which is so called because the precious metais of which it is composed are valuable commodities in themselves, apart from their legal value as money. The world's consuming power of commodities is practically unlimited and so is its producing capacity. The same will most probably not apply to the two precious metais and possibly to silver only if it is again recognized as absolutely needed as an auxiliary to gold.
The existing monetary system of the West, to the exclusion of the East, has faüed. Even if all the customhouse barriers and other trade impediments were removed or reduced, that would only mean the removal of some of the consequences of the collapse, not the removal of the rockbottom cause, which is the scarcity of the gold supply coinciding with the destruction of the gold value of silver and with the tremendous increase of the production of commodities.
Whilst failure of the Conference would probably be worse than no Conference, the adoption of radical monetary Reform, such as Bimetallism Symmetallism may raise fresh hopes, confidence may return, and the prosperity of the World will continue its upward course until it shall have filled the abyss of human need.
As Sir R. Horne recendy remarked, the remonetization of silver will be like the pouring of water into a pump, in order to set it going again. And indeed, all that the world now requires is a return of confidence, for Hamlet truly says that there is nothing either good or bad, but thoughts make it so.



ADDENDUM
REPORT OF THE DIRECTOR OF THE MINT
Highesl, lowest, and average price of bar silver in London, per ounce British Standard {926 thousandths fine), since 1833, and the equivalent tn United Slales gold coin, of an ounce 1,000 fine, taken at the average price and par of exchange
High- Low- Aver- Value of a High- Low- Aver- Value ol a
Calendar est est age fine ounce Calendar est est age fine ounce
year quota- quota- quota- at average year qnota- quota- quota- at average
tion tion tion quotation tion tion tion quotation
Pence Pence Penee Dollars Pence Pence Pence Dollars
1833 69% 58% 59%e 1.297 1882 52% 80 51% 1.13863
1834 60% 59% 59'Me 1.313 1883 61%e 50Me 60%e 1.10874
1836 60 69J4 59'Me 1.308 1884 OH 49% 50'Me 1.11068
1836 60% 59% 60 1.315 1885 80 46% 4891e 1.06510
1887 60% 59 59Mo 1.305 1886 47 42 45% .98467
1838 60% 59% 59% 1.301 1887 47% 43% 44'He .97946
1839 60% 60 60% 1.323 1888 449ie 41% 42% .93974
1840 60% 60% 60% 1.323 1889 44% 41>M« 42'Me .93611
1841 60% 59% 60He 1.316 1890 54% 43% 47% 1.04634
1842 60 89% 59^6 1.303 1891... 48% 48% 45%e .98800
1848 59% 69 59%e 1.297 1892.. 43% 37% 39% .87146
1844 59% 59% 59% 1.304 1893 38% 30% 35Me .78030
1844 89% 58% 59% 1.298 1894 31% 27 28'%s .63479
1846 60% 59 59%a 1.300 1896 31% 27%e 29>Mo .65406
1847 60% 58% 59>%o 1.308 1896 31>%e 29% 30>%e .67668
1848 60 68% 59% 1-304 1897 29'%» 23% 27Me .60438
1849 60 69% 59% 1.309 1898 28% 26 26'%e .69010
1860 61% 69% 60M« 1.316 1899 29 26% 27%« .60154
1861 61% 60 61 1.337 1900 30% 27 2851e .62007
1883 61% 69% 60% 1.326 1901 299ie 24'%« 27%e .69696
1853 61% 60% 61% 1.348 1902... 26Me 21"Me 24Me .63798
1864 61% 60% 61% 1.348 1903 ... 28% 21'Me 24% .64367
1868 61% 60 61Me 1.344 1904 28%e 24%e 26'%a .67876
1868 63% 60% 61%e 1.344 1905 30%e 25%e 27'%e .61027
1867 62% 61 61% 1.353 1906 33% 29 30% .67689
1868 61% 60% 61M« 1.344 1907 ... 32% e 24H 30%e .66152
1869 62% 61% 62%» 1.360 1908 27 23 24'%a .53490
1860 62% 61% 61'He 1-352 1909 24% 23Me 23*%2 .63016
1861 61% 60% 60'%e 1.333 1910 26J.4 23% 6 24% .64077
1863 62% 61 61%« 1.346 1911 26% 23'Hs 24'%2 . 53928
1863 61% 61 61% 1.345 1912 29'Me 25% 28He .61470
1864.... 62% 60% 61% 1.345 1918 29% 26Me 27%e .60458
1865 61% 60% 61He 1.338 1914 ... 37% 22% 25% .66813
1866 62% 60% 61% 1.339 1915 27% 22%e 23% .61893
1867 61% 60% 60>{e 1.328 1916 37 % 26'Me 31% .68647
1868 mü 60% 60% 1.326 1917 55 35'Ho 40'Me .89638
1869 61 60 60%e 1.335 1918 i9H 42% 47'%2 1.04171
1870 60% 60!4 60%. 1.328 1919 79% 47% 57%2 1.25047
1871 61 60Mo 60% 1.326 1920 89% 38% 61'%a 1.34649
1873 61% 69',i 60Me 1.322 1921 43% 30% 362%2 .80633
1873 69i%o 57% 59%« 1.29769 1922 37% 30% 34'%a . 75403
1874 69% 67% 58%« 1.37883 1923 33'M» 30% 31'%e .70038
1875 67% 55H 56'M« 1.24233 1924 36He 31% 33% .74456-
1876 68% 46% 62% 1.16414 1925 33%e 31%e 32%2 .70346
1877 88% 53% 54'%e 1.20189 1926 31'Me 24%« 28m6 .62873
1878 65% 49% 52i%e 1.15358 1927 28 24% 26He .67070
1879 63% 68% 51% 1.12392 1928 28% 26Ho 26% .58627
1880.. . 63'Me 61% 52% 1.14507 1929 26%e 21%« 24'%2 .63631
1881 62% 50% 51'Mo 1.13229 1930 21% 14%e 17*%a .88734
See also pp. 80—81.







ERRATA
Page 24, line 6: his, should be: this „ 33, line 2: éycluded, should be: excluded .. 39. line 16: p. 30, should be: p. 31 „ 52, hne 3 of the heading: PAYMENTS, should
be: PAYMENT „ 80, line 23 after Economist read: supplied by „ 91, line 21: page, should be: page 16 „ 97, line 7: there, should be: these „ 114, line 33: to, should be: too *» 117, line 1: Desbourouph, should be: Oesborough
note: page 82, should be: page 85 „ 144, line 27: of, should be: or
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