Part III. Signed by the other six Members of the Commission: Rt. Hon. Sir LOUIS MALLET, C.B.; Rt. Hon. A. J. BALFOUR, M.P.; Rt. Hon. HENRY CHAPLIN, M.P.; Sir D. BARBOUR, K.C.S.I.; Sir W. H. HOULDESWORTH, Bart., M. P.; Mr. SAMUEL MONTAGU, M.P.

SEC. II.

In Sec. 47 of Part II., our colleagues express the view that "the greater part of the fall has resulted from causes touching the commodities rather than from an appreciation of the standard; and again in Section 99, "we believe the fall to be mainly due, at all events, to circumstances independent of changes in the production of or demand for the precious metals, or the altered relation of silver to gold."

From this view we feel bound to dissent. The importance of the question whether the incapacity of the existing stock of gold to meet the currency requirements of the world arises from the fact that those currency requirements are increasing through the growth of commerce and of population, or through the monetary policy of particular nations, may easily be exaggerated. In our opinion it is almost impossible to distinguish between these two sets of causes. A great increase in

the production of commodities means a great increase in wealth, and would ordinarily be attended with an increased demand for the standard metal. The prices of some commodities would fall because they were produced in increasing quantities; the prices of commodities generally would tend to fall because there was an increased demand for the standard metal, and there are no means of saying how much of the alteration in price in any particular case is due to increased production, and how much to increased demand for the standard.

In any case, however, we differ from the view taken by our colleagues, to which we have above referred, for the following

reasons:

In the first place we find no proof that the supply of commodities generally has increased, or that the cost of production has diminished at a greater rate in the years which have elapsed since the rupture of the bimetallic par than was the case in periods of like duration, antecedent to that date.

SEC. 12. There appears to us to be sufficient evidence (to which we shall refer later on when we deal in detail with the several questions contained in our order of reference) to show that the fall of prices and its resulting evils have affected all classes of the population (with the exception of those in the enjoyment of fixed incomes payable in gold), from the manufacturers and producers down to the wage-earners; but, in our opinion, it is the latter class which have the most direct and immediate interest in the adoption of any measure which will re-establish the comparative stability of the standard of value, such as it was before the recent divergence in the relative value of the precious metals.

We are strongly

SEC. 28.of opinion that both metals must continue to be used as standard money; the result of using them separately and independently since 1873 have been most unsatisfactory, and may be positively disastrous in the future.

It cannot be questioned that until 1873 gold and silver were always effectively linked by a legal ratio in one or more countries.

It is equally indisputable that the relative value of the two metals has been subject to greater divergence since 1874 than during the whole of the two hundred years preceding that date, notwithstanding the occurrence of variations in their relative production more intense and more prolonged than those which have been experienced in recent years.

SEC. 29-In 1873 and 1874 the connecting link disappeared, and for the first time the system of rating the two metals ceased to form a subject of legislation in any country in the world.

The law of supply and demand was for the first time left to operate independently upon the value of each metal; and simultaneously the ratio which had been maintained, with scarcely any perceptible variation, for two hundred years, gave place to a marked and rapid divergence in the relative value of gold and silver,

Appendix.

103

which has culminated in a change from

15 to 1 to 22 to I.

From the "Nineteenth Century Review," April, 1893.

I was one of the six members of the Gold and Silver Commission who could not see their way to recommend bimetallism, and reported: "When we look at the character and times of the fall in the prices of commodities we think the sounder view is that the greater part of the fall has resulted from causes touching the commodities, rather than from an appreciation of the standard." In the same paragraph we had said: "We are far from denying that there may have been, and probably has been, some appreciation of gold," though we held it impossible to determine its extent. Let me make a confession. I hesitated a little about this paragraph. I thought there was, perhaps, more in the suggestion of an appreciation of gold than my colleagues believed; but whilst I thus doubted I did